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What is Escrow?

 Louis Wolfson & Co. can walk you through closing - (617) 799-3326
Escrow: An escrow holder is hired to assure your place closes on time and the money exchanging part of closing goes smoothly. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. An everyday way to understand what an escrow company does is to think of the use of PayPal for online purchases.

The escrow agent insures that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being finished. This includes receiving funds and paperwork, finishing required forms, and getting the release documents for any loans or liens that have been paid off with the transaction, assuring you have a free title to your house before the asking price is fully paid.

The certificates the escrow holder may collect include:

  • Fire and other insurance policies
  • Title insurance policies
  • Terms of sale and any seller-assisted financing
  • Requests for payment for various services to be paid out of escrow funds
  • Loan documents
  • Tax statements

Closing on the property takes place when the steps of the escrow are finished. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then transferred to you as new owner and appropriate title insurance is issued as outlined in the escrow policy.

At the close of escrow, payments of funds are made in an acceptable form to the escrow. As your REALTOR, I'll let you know what is an acceptable form of payment.

The Escrow Holder Will:

  • Write escrow guidelines
  • Request title search
  • Comply with lender's guidelines as specified in the escrow agreement
  • Receive payments from the buyer
  • Prorate tax, interest, insurance and other fees according to guidelines
  • Record deeds and other legal documents as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been met
  • Disburse funds and finalize instructions

The Escrow Holder Won't:

  • Advise you - the escrow agent stays a neutral, third-party status
  • Give insight about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow guidelines
  • Petition title inquiry
  • Meet lender's requirements as written in the escrow agreement
  • Intake payments from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been finished
  • Disburse monies and finish instructions
  • Tell you what's best - the escrow holder must maintain a neutral, third-party status
  • Give insight about tax implications

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

Now you know more about being in escrow. And, you can be a more informed home buyer and future homeowner.

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