What is Escrow?
Clearing the final hurdles like obtaining funds, finishing forms, getting the documents for loans and liens, and making sure you get a clean title to the property in preparation of your purchase gets finalized are all part of the job of the escrow agent.
Escrow holders look for the following records:
- 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 each step of the complete in escrow process. All payments owed and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the home is then given to you as now current homeowner and related title insurance is issued as noted in the escrow instructions.
When closing is completely finished, you'll make a payment to the escrow holder. You'll know when it's time to submit the form of payment.
The Escrow Holder Will:
- Write escrow guidelines
- Perform a title research
- Meet lender's standards as written in the escrow agreement
- Intake funds from the buyer
- Prorate insurance, tax, interest and other payments according to guidelines
- Record deeds and other documents as instructed
- Obtain title insurance policy
- Close escrow when all terms of agreement of seller and buyer are met
- Disburse monies and finalize instructions
The Escrow Holder Will Not:
- Tell you what's best - the escrow company stays at an impartial, third-party status
- Offer opinions about the outcome of your taxes
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The Escrow Holder Will:
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The Escrow Holder Won't:
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Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your 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 simple outline of the escrow process. Your specific methods will be unique depending on your lender and your escrow company.