What to Expect When You're in Escrow

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Buying Your Next House: Closing

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Escrow: A neutral, third party (known as the escrow holder or the escrow agent) is used to assure your property closes on time and the process goes smoothly. A place is said to be in escrow when in the closing transaction, funds is secured by a third party on behalf of two parties when the exchange of money takes place. An everyday way to think of what an escrow company does is to think of the use of PayPal for online purchases.

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

Escrow agents want to acquire the following documents:

Loan documents
Tax statements
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

Closing on the house takes place when the steps of the escrow are finished. All expenses like title insurance, inspections and real estate commissions are paid. You'll then receive the title to the house and the title insurance gets dispersed as outlined in the escrow instructions.

The escrow company gets a payment at the completion of closing. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

Prepare escrow instructions
Request title inquiry
Meet the bank's standards as outlined in the escrow agreement
Accept payments from the buyer
Prorate tax, interest, insurance and other fees according to instructions
Record deeds and other paperwork as instructed
Obtain title insurance policy
Close escrow when all instructions of seller and buyer are met
Disburse monies and finish instructions

The Escrow Holder Won't:

Advise you - the escrow company stays at an impartial, third-party status
Give insight about tax implications

The Escrow Holder Will:		The Escrow Holder Won't:
Assemble escrow instructions Petition title inquiry Meet lender's standards as specified in the escrow agreement Accept payments from the buyer Prorate tax, interest, insurance and other fees according to instructions Record deeds and other paperwork as instructed Request title insurance policy Close escrow when all instructions of seller and buyer have been finished Disburse payments and finish instructions		Advise you - the escrow holder must stay at a fair, third-party status Give insight about the outcome of your taxes

Mortgage Escrow Account

A Mortgage Escrow Account is used to make payments for on-going fees while there is a loan on the house. Escrow Accounts are contributed to monthly by the home buyer (who is now the homeowner), but there is also a lump sum that goes into the account at closing.

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

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