Don't let real estate industry jargon keep you from becoming a homeowner. We can help you become knowledgeable about the process.
The Place is Almost Yours
First, a little about "escrow". When you're closing on your new house, a neutral, third party (known as the escrow holder or the escrow agent) is used to make certain the process will close properly and in a specific time frame.
When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow.
For example, in a Web purchase, PayPal is the neutral third party that holds the buyer's payment, and then hands over the payment to the seller.
The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's agreement are reached prior to the sale being completed. This includes receiving monies and paperwork, completing required forms, and obtaining the release documents for any loans or liens that have been paid off with the transaction, assuring you have a clear title to your place before the purchase price is fully paid.
These are the records that escrow companies usually compile:
- 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
- Title insurance policies
Closing on the property takes place when all of the procedures of the escrow are finished.
All payments owed and fees are collected 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 noted in the escrow instructions.
At the close of escrow, payment of funds shall be made in an acceptable form to the escrow.
You'll know when it's time to submit the form of payment.
The Escrow Holder Will:
The Escrow Holder Won't:
- Assemble escrow guidelines
- Request title research
- Comply with lender's standards as written in the escrow agreement
- Accept payments from the buyer
- Prorate interest, insurance, tax and other payments according to guidelines
- Record deeds and other paperwork as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer are complete
- Disburse monies and finish instructions
- Give advice - the escrow holder has to remain an impartial, third-party status
- Dispense opinions about future tax estimations
Mortgage Escrow Account
A Mortgage Escrow Account is started to make payments for 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 informed buyer.