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Completing the Transaction

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Let's talk about "escrow". When you're closing on your new home, an escrow company is used to insure the process will close correctly and in a certain amount of time. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. An everyday way to think of what an escrow company does is to think of how you might use PayPal for online purchases.

Tying up any loose ends like receiving funds, signing forms, getting the documents for loans and liens, and making sure you get a clear title to the property prior to your purchase gets finalized are all part of the job of the escrow holder.

These are the legal forms that escrow companies usually look for:

  • 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
  • Tax statements
  • Fire and other insurance policies

Upon completion of all portions of the escrow, closing can take place. All debts and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then receive the title to the property and the title insurance gets issued as agreed upon in the escrow instructions.

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

The Escrow Holder Will:

  • Write escrow guidelines
  • Petition title inquiry
  • Meet the bank's guidelines 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 legal documents as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse funds and finish instructions

The Escrow Holder Will Not:

  • Advise you - the escrow agent has to remain an impartial, third-party status
  • Offer opinions about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Request title search
  • Meet the bank's requirements as specified in the escrow agreement
  • Accept funds from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other documents as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse payments and finalize instructions
  • Tell you what's best - the escrow company must stay at a fair, third-party status
  • Dispense opinions about future tax estimations

Mortgage Escrow Account

A Mortgage Escrow Account is used to pay on-going expenses while there is a loan on the 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 ABCs of the escrow process down, you can be a confident buyer.

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