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Escrow 101

 Louis Wolfson & Co. can walk you through closing - (617) 799-3326
First, a little about "escrow". An escrow company is brought on to assure your place closes on time and the money exchanging part of closing goes smoothly. Escrow holders hold money for "safe-keeping" in a deal between a buyer and seller. An easy way to think of what an escrow company does is to compare it to PayPal for Internet purchases.

The escrow holder makes sure that the terms and conditions of the agreement between the seller and buyer are performed prior to the sale being completed.

These are the legal documents that escrow holders usually look for:

  • 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
  • Terms of sale and any seller-assisted financing

Closing on the property happens when the steps of the escrow are finished. All payments owed and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then get the title to the property and the title insurance gets issued as agreed upon in the escrow instructions.

The escrow agent gets a payment when the closing is complete. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Prepare escrow guidelines
  • Request title inquiry
  • Meet lender's standards as written in the escrow agreement
  • Intake funds from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse payments and finalize instructions

The Escrow Holder Won't:

  • Offer advice - the escrow holder stays a neutral, third-party status
  • Offer opinions about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow guidelines
  • Perform a title research
  • Meet lender's requirements as written in the escrow agreement
  • Accept funds from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are met
  • Disburse monies and finish instructions
  • Tell you what's best - the escrow company stays a neutral, third-party status
  • Dispense opinions about the outcome of your taxes

Mortgage Escrow Account

A Mortgage Escrow Account is started to make payments for on-going expenses while there is a loan on the house. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.

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

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Louis Wolfson & Co.

29 Cimino Road
Needham, MA 02494