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Completing the Transaction
First, a little about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is used to assure your house closes on time and the money exchanging part of closing goes smoothly. A place is said to be in escrow when in the closing process, funds is held by a third party on behalf of a buyer and a seller when the transaction is taking place. For example, in an Internet auction, PayPal is the neutral third party that obtains the buyer's payment, and then sends the payment to the seller.
The escrow holder makes sure that the terms and conditions of the agreement between the two parties are completed prior to the sale being finalized.
The certificates the escrow holder may secure include:
- Fire and other insurance policies
- 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
Closing on the house happens when all of the procedures of the escrow are done. At this time, all payments and fees for inspections, title insurance and real estate commissions are taken. The house's title goes to you and title insurance begins per the policies of your particular escrow agreement.
At the close of escrow, payments of funds are made in an acceptable form to the escrow. I'll keep you up-to-date on the procedure.
The Escrow Holder Will:
The Escrow Holder Won't:
- Assemble escrow guidelines
- Request title research
- Meet the bank's requirements as noted 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
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer are complete
- Disburse funds and finalize instructions
- Advise you - the escrow holder stays a neutral, third-party status
- Give insight about future tax estimations
Mortgage Escrow Account
A Mortgage Escrow Account is used to pay recurring fees 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.
Now you know more about being in escrow. And, you can be a more informed home buyer and future homeowner.