Don't let real estate industry jargon prevent you from becoming a homeowner. I can help you understand the process. Call me at 410-647-8000 ext. 817 and I'll give you more information.
What is Escrow?
Escrow: To close the sale of a place, a neutral, third party (the escrow agent) is employed to assure the transaction will close correctly and on time. A home is said to be in escrow when in the closing process, payment is held by a third party on behalf of a buyer and a seller when the exchange of money takes place. An easy way to think of what an escrow company does is to think of the use of PayPal for Internet purchases.
Settling the last details like obtaining funds, signing forms, securing the documents for loans and liens, and assuring you get a spotless title to the home before your purchase gets finalized are all part of the job of the escrow agent.
These are the legal forms that escrow agents usually compile:
- Tax statements
- 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
Closing on the property takes place when the steps of the escrow are finished. All expenses like title insurance, inspections and real estate commissions are paid. Title to the property is then given to you as buyer and related title insurance is issued as outlined in the escrow instructions.
The escrow agent receives a payment at the completion of closing. I'll keep you up-to-date on the procedure.
The Escrow Holder Will:
- Write escrow instructions
- Request title search
- Meet the bank's requirements as outlined in the escrow agreement
- Receive 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 terms of agreement of seller and buyer are met
- Disburse funds and finish instructions
The Escrow Holder Will Not:
- Tell you what's best - the escrow company stays at an impartial, third-party status
- Give insight about future tax estimations
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The Escrow Holder Will:
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The Escrow Holder Won't:
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- Assemble escrow instructions
- Perform a title search
- Meet lender's guidelines as specified in the escrow agreement
- Accept payments from the buyer
- Prorate tax, interest, insurance and other fees according to instructions
- Record deeds and other paperwork as instructed
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer have been finished
- Disburse monies and finish instructions
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- Offer advice - the escrow company stays at an impartial, third-party status
- Offer opinions about the outcome of your taxes
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Mortgage Escrow Account
A Mortgage Escrow Account is started to pay rolling fees 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.
This is a easy to understand guide about the escrow process. Your specific plan may be different based on your lender and your escrow holder.