Escrow 101
Tying up any loose ends like receiving funds, completing forms, securing the documents for loans and liens, and making sure you get a clean title to the house in preparation of your purchase gets finalized are all part of the job of the escrow company.
These are the legal forms that escrow holders usually look to collect:
- 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
You're ready to close when all steps are complete in escrow process. All outstanding payments and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the home is then transferred to you as new homeowner and appropriate title insurance is issued as outlined in the escrow instructions.
When closing is in it's last step, you'll submit a payment to the escrow agent. I'll keep you informed on the procedure.
The Escrow Holder Will:
- Write escrow guidelines
- Perform a title inquiry
- Comply with the bank's guidelines as outlined in the escrow agreement
- Intake payments 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 instructions of seller and buyer are met
- Disburse monies and finalize instructions
The Escrow Holder Will Not:
- Advise you - the escrow company must stay at a fair, third-party status
- Offer opinions about tax implications
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The Escrow Holder Will:
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The Escrow Holder Won't:
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Mortgage Escrow Account
A Mortgage Escrow Account is used to pay rolling expenses 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.
This is a quick run-down of the escrow process. Your individual process might vary depending on your lender and your escrow agent.
