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What is Escrow?
Let's talk about "escrow". When you're closing on your new house, an escrow company is used to assure the process will close properly and in a specific time frame. Escrow holders hold money for "safe-keeping" in transactions between a buyer and seller. PayPal is a simple way to think of an escrow company.
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.
The certificates the escrow company may collect include:
- 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
- Tax statements
Closing on the property happens when all of the procedures of the escrow are complete. At this time, all payments and fees for inspections, title insurance and real estate commissions are paid out. Title to the property is then transferred to you as buyer and correct title insurance is issued as noted in the escrow policy.
At the close of escrow, fees are paid in an acceptable form to the escrow. We'll keep you updated on the next steps.
The Escrow Holder Will: | | The Escrow Holder Won't: |
- Write escrow guidelines
- Petition title search
- Meet the bank's guidelines as written in the escrow agreement
- Intake 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 are complete
- Disburse payments and finish instructions
| | - Give advice - the escrow company stays a neutral, third-party status
- Dispense opinions about the outcome of your taxes
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Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your 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 how to close on your future home. And, you can be a more informed home buyer and future homeowner.