Escrow 101
Escrow
An escrow holder is used to assure your property closes on time and the process goes smoothly. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an Web transaction, PayPal is the neutral third party that obtains the buyer's cash, and then hands over the money to the seller.
The escrow agent makes sure that the terms and conditions of the agreement between the seller and buyer are reached in preparation of the sale being finalized.
Upon completion of all instructions of the escrow, closing can take place. All debts and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). The home's title goes to to you and title insurance begins per the steps of your particular escrow agreement.
When closing is in it's last step, you'll make a payment to the escrow company. 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 instructions
- Request title inquiry
- Meet lender's standards as specified in the escrow agreement
- Accept funds from the buyer
- Prorate tax, interest, insurance and other fees according to guidelines
- Record deeds and other legal documents as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer are complete
- Disburse payments and finish instructions
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- Give advice - the escrow company must maintain a neutral, third-party status
- Dispense opinions about tax implications
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Mortgage Escrow Account
A Mortgage Escrow Account is established to pay 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 basics of the escrow process down, you can be a informed buyer. | 
