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Completing the Transaction

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Let's talk about "escrow". To finish the sale of a house, a neutral, third party (the escrow company) is brought into the picture to assure the process will close appropriately and on time. A property is said to be in escrow when in the closing transaction, funds is held by a third party on behalf of two parties when the transaction is taking place. An easy way to understand what an escrow company does is to think of how you might use PayPal for Internet purchases.

The escrow company makes sure that the terms and conditions of the agreement between the two parties are completed prior to the sale being completed.

The certificates the escrow holder may collect include:

  • 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
  • Fire and other insurance policies
  • Title insurance policies

Upon finishing of all portions of the escrow, closing can take place. All debts and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the home is then given to you as new owner and related title insurance is issued as outlined in the escrow policy.

At the close of escrow, payments are submitted in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Assemble escrow instructions
  • Request title inquiry
  • Meet the bank's requirements as specified in the escrow agreement
  • Receive funds from the buyer
  • Prorate insurance, tax, interest and other payments 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 funds and finish instructions

The Escrow Holder Won't:

  • Tell you what's best - the escrow holder has to remain an impartial, third-party status
  • Give insight about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Petition title research
  • Comply with lender's guidelines as specified in the escrow agreement
  • Accept funds from the buyer
  • Prorate interest, insurance, tax and other payments according to guidelines
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been met
  • Disburse monies and finalize instructions
  • Offer advice - the escrow company must maintain a neutral, third-party status
  • Give insight about tax implications

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.

This is a simple outline of the escrow process. Your individual process might be slightly different depending on your lender and your escrow agent.

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Louis Wolfson & Co.

29 Cimino Road
Needham, MA 02494