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Completing the Transaction
Escrow: When you're closing on your new house, an escrow holder is used to insure the process will close properly and in a specific time frame. A house is said to be in escrow when in the closing transaction, funds is secured by a third party on behalf of a buyer and a seller when the transaction is taking place. PayPal is a good way to picture an escrow company.
The escrow holder makes sure that the terms and conditions of the agreement between the two parties are performed in preparation of the sale being completed.
These are the pieces of paperwork that escrow companies usually compile:
- 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
Closing on the home takes place when the steps of the escrow are done. All expenses like title insurance, inspections and real estate commissions are paid. Title to the property is then transferred to you as new owner and related title insurance is issued as outlined in the escrow policy.
The escrow holder gets a payment at the completion of closing. You'll know when it's time to submit the form of payment.
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The Escrow Holder Will: |
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The Escrow Holder Won't: |
- Write escrow guidelines
- Perform a title inquiry
- Meet lender's requirements as outlined in the escrow agreement
- Receive funds from the buyer
- Prorate insurance, tax, interest and other payments according to instructions
- Record deeds and other legal documents as instructed
- Obtain 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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- Tell you what's best - the escrow agent has to remain an impartial, third-party status
- Give insight about tax implications
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Mortgage Escrow Account
A Mortgage Escrow Account is established 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.
Once you're comfortable with the escrow process, you can be a informed buyer.