What to Expect When You're in Escrow

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First, a little about "escrow". An escrow company is brought on to assure your house closes on time and the money exchanging part of closing goes smoothly. Escrow companies hold money for "safe-keeping" in a deal between a buyer and seller. A simple way to think of what an escrow company does is to compare it to PayPal for Internet purchases.

The escrow agent makes sure that the terms and conditions of the agreement between the sellers and the buyers are met in preparation of the sale being finalized.

These are the records that escrow agents usually compile:

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

Upon completion of all portions of the escrow, closing can take place. At this time, all payments and fees for inspections, title insurance and real estate commissions are paid out. Title to the property is then given to you as new homeowner and appropriate title insurance is issued as outlined in the escrow policy.

The escrow agent 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:

Write escrow instructions
Petition title search
Meet the bank's guidelines as specified in the escrow agreement
Accept funds 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 payments and finalize instructions

The Escrow Holder Will Not:

Advise you - the escrow company stays at an impartial, third-party status
Give insight about the outcome of your taxes

The Escrow Holder Will:		The Escrow Holder Won't:
Assemble escrow guidelines Perform a title research Comply with the bank's standards as written in the escrow agreement Accept payments from the buyer Prorate interest, insurance, tax and other payments according to guidelines Record deeds and other legal documents as instructed Request title insurance policy Close escrow when all instructions of seller and buyer are met Disburse funds and finalize instructions		Tell you what's best - the escrow holder must maintain a neutral, third-party status Give insight about future tax estimations

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your 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 how to close on your future home. And, you can be a better informed home buyer and future homeowner.

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