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Completing the Transaction

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Escrow: To finalize the sale of a property, a neutral, third party (the escrow agent) is engaged to assure the transaction will close appropriately and on time. A property is said to be in escrow when in the closing transaction, payment is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. A simple way to understand the concept of what an escrow company does is to think of how you might use PayPal for online purchases.

The escrow holder makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being completed. This includes receiving funds and records, filling out required forms, and obtaining the release documents for any loans or liens that have been paid with the transaction, assuring you have a free title to your home before the final price is fully paid.

These are the pieces of paperwork that escrow agents usually look to collect:

  • 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 all steps are done in escrow process. At this time, all payments and dues for inspections, title insurance and real estate commissions are collected. Title to the home is then transferred to you as buyer and related title insurance is issued as outlined in the escrow instructions.

At the close of escrow, in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Prepare escrow guidelines
  • Petition title research
  • Comply with lender's standards as specified in the escrow agreement
  • Accept payments from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other documents as instructed
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse monies and finish instructions

The Escrow Holder Will Not:

  • Advise you - the escrow company has to remain an impartial, third-party status
  • Offer opinions about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow guidelines
  • Petition title search
  • Meet the bank's standards as written in the escrow agreement
  • Receive funds from the buyer
  • Prorate interest, insurance, tax 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 have been met
  • Disburse payments and finish instructions
  • Tell you what's best - the escrow holder must stay at a fair, third-party status
  • Offer 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. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

Now you know more about being in escrow. And, you can be a better informed home buyer and future homeowner.

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