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Completing the Transaction
Let's talk about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is hired to assure your property closes on time and the closing process goes smoothly. A property is said to be in escrow when in the closing process, money is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. For example, in an online purchase, PayPal is the neutral third party that holds the buyer's cash, and then sends the payment to the seller.
The escrow holder is careful to assure that all terms and conditions of the seller's and buyer's contract are performed prior to the sale being finished. This includes securing payments and documents, finishing required forms, and seeking out the release documents for any loans or liens that have been paid off with the transaction, assuring you have a clear title to your property before the agreed upon price is fully paid.
The documents the escrow holder may obtain include:
- 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
- Tax statements
- Fire and other insurance policies
You're ready to close when all steps are done in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. You'll then secure the title to the property and the title insurance gets dispersed as stated in the escrow instructions.
When closing is finished, you'll submit a payment to the escrow agent. I'll keep you informed on the procedure.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow instructions
- Perform a title inquiry
- Meet lender's requirements as written in the escrow agreement
- Intake funds from the buyer
- Prorate tax, interest, insurance and other fees according to guidelines
- Record deeds and other documents as instructed
- Request title insurance policy
- Close escrow when all instructions of seller and buyer have been finished
- Disburse payments and finish instructions
- Offer advice - the escrow holder stays a neutral, third-party status
- Dispense opinions about the outcome of your taxes
Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.
Once you're comfortable with the escrow process, you can be a more assured buyer.
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