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Completing the Transaction
Escrow: To complete the sale of a home, a neutral, third party (the escrow holder) is engaged to assure the process will close correctly and on time. A home is said to be in escrow when in the closing transaction, money 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. For example, in an Internet purchase, PayPal is the reliable third party that holds the buyer's cash, and then hands over the funds to the seller.
Clearing the final hurdles like taking in funds, completing forms, obtaining the documents for loans and liens, and making sure you get a spotless title to the property prior to your purchase gets finalized are all parts of closing in which an escrow agent is useful.
Escrow companies collect the following pieces of paperwork:
- Tax statements
- 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
You're ready to close when each step of the finished in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then given to you as now current homeowner and related title insurance is issued as noted in the escrow instructions.
When closing is completed, you'll pay the fees to the escrow agent. We'll keep you up-to-date on the next steps.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow guidelines
- Perform a title search
- Comply with lender's guidelines as specified in the escrow agreement
- Intake funds from the buyer
- Prorate insurance, tax, interest and other payments according to guidelines
- Record deeds and other paperwork as instructed
- Request title insurance policy
- Close escrow when all instructions of seller and buyer are complete
- Disburse monies and finalize instructions
- Tell you what's best - the escrow agent must maintain a neutral, third-party status
- Give insight about tax implications
Mortgage Escrow Account
Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. 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 confident buyer.