What to Expect When You're in Escrow

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Let's talk about "escrow". To complete the sale of a house, a neutral, third party (the escrow company) is employed to assure the transaction will close correctly and on time. A house is said to be in escrow when in the closing process, payment is held by a third party on behalf of a buyer and a seller when the transaction is taking place. For example, in an online transaction, PayPal is the neutral third party that obtains the buyer's cash, and then sends the funds to the seller.

Clearing the final hurdles like receiving funds, completing forms, getting the documents for loans and liens, and making sure you get a spotless title to the property before your purchase gets finalized are all parts of closing in which an escrow company is useful.

Escrow companies want to obtain the following records:

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
Loan documents

Closing on the house takes place when all of the procedures of the escrow are complete. All expenses like title insurance, inspections and real estate commissions are paid. The house's title goes to you and title insurance begins per the steps of your individual escrow agreement.

When closing is completely finished, you'll submit a payment to the escrow company. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

Prepare escrow guidelines
Request title search
Meet lender's requirements as outlined in the escrow agreement
Accept payments from the buyer
Prorate tax, interest, insurance and other fees according to guidelines
Record deeds and other legal documents as instructed
Request title insurance policy
Close escrow when all instructions of seller and buyer have been finished
Disburse payments and finish instructions

The Escrow Holder Will Not:

Tell you what's best - the escrow agent stays at an impartial, third-party status
Give insight about future tax estimations

The Escrow Holder Will:		The Escrow Holder Won't:
Assemble escrow instructions Petition title research Meet lender's guidelines as noted in the escrow agreement Accept funds from the buyer Prorate tax, interest, insurance and other fees 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 finished Disburse payments and finish instructions		Offer advice - the escrow holder has to remain an impartial, third-party status Give insight about future tax estimations

Mortgage Escrow Account

A Mortgage Escrow Account is used to pay 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 more confident home buyer and future homeowner.

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