What to Expect When You're in Escrow

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First, a little about "escrow". To complete the sale of a home, a neutral, third party (the escrow holder) is employed to assure the process will close correctly and on time. Escrow agents hold money for "safe-keeping" in transactions between a buyer and seller. For example, in an Internet auction, PayPal is the neutral third party that holds the buyer's funds, and then hands over the funds to the seller.

Tying up any loose ends like taking in funds, finishing forms, securing the documents for loans and liens, and assuring you get a clear title to the property before your purchase gets finalized are all part of the job of the escrow holder.

These are the records that escrow companies usually compile:

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

You're ready to close when all steps are complete in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. You'll then receive the title to the home and the title insurance gets issued as outlined in the escrow instructions.

At the close of escrow, fees are paid in an acceptable form to the escrow. As your agent, I'll let you know what is an acceptable form of payment.

The Escrow Holder Will:

Write escrow instructions
Perform a title inquiry
Meet lender's guidelines as outlined in the escrow agreement
Intake payments from the buyer
Prorate tax, interest, insurance and other fees according to instructions
Record deeds and other legal 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 Will Not:

Tell you what's best - the escrow company must maintain a neutral, third-party status
Offer opinions about tax implications

The Escrow Holder Will:		The Escrow Holder Won't:
Prepare escrow guidelines Perform a title search Comply with lender's guidelines as outlined in the escrow agreement Intake funds from the buyer Prorate tax, interest, insurance and other fees according to guidelines Record deeds and other documents as instructed Request title insurance policy Close escrow when all terms of agreement of seller and buyer are met Disburse funds and finish instructions		Advise you - the escrow holder must stay at a fair, third-party status Dispense opinions about the outcome of your taxes

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

Once you have the rules of the escrow process down, you can be a more assured buyer.

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