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Completing the Transaction
First, a little about "escrow". When you're closing on your new property, an escrow agent is used to assure the transaction will close without problems and in a timely manner.
Escrow holders hold money for "safe-keeping" in transactions between a buyer and seller.
A simple way to think of what an escrow company does is to compare it to PayPal for online purchases.
Tying up any loose ends like receiving funds, finishing forms, securing the documents for loans and liens, and assuring you get a spotless title to the property in preparation of your purchase gets finalized are all part of the job of the escrow company.
Escrow holders look for the following legal documents:
- 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
Upon completion of all instructions of the escrow, closing can take place.
All outstanding payments and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions).
Title to the home is then transferred to you as buyer and appropriate title insurance is issued as outlined in the escrow policy.
The escrow holder receives a payment when the closing is complete.
I'll keep you up-to-date on the procedure.
The Escrow Holder Will:
The Escrow Holder Won't:
- Assemble escrow guidelines
- Perform a title research
- Meet lender's guidelines as noted in the escrow agreement
- Accept payments from the buyer
- Prorate insurance, tax, interest and other payments according to guidelines
- Record deeds and other paperwork as instructed
- Request title insurance policy
- Close escrow when all instructions of seller and buyer have been met
- Disburse payments and finalize instructions
- Advise you - the escrow holder stays at an impartial, third-party status
- Dispense opinions about the outcome of your taxes
Mortgage Escrow Account
Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created.
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.
Now you know more about being in escrow. And, you can be a smarter home buyer and future homeowner.