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Completing the Transaction

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Escrow: When you're closing on your new property, an escrow agent is used to guarantee the process will close appropriately and in a certain amount of time. Escrow agents hold money for "safe-keeping" in a deal between a buyer and seller. A simple way to think of what an escrow company does is to think of how you might use PayPal for Internet purchases.

The escrow holder is careful to assure that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being completed. This includes getting monies and records, completing required forms, and obtaining the release documents for any loans or liens that were cleared with the transaction, assuring you have a clean title to your place before the asking price is fully paid.

These are the documents that escrow holders usually look to collect:

  • 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

You're ready to close when all steps are done in escrow process. All payments owed and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the house is then given to you as new homeowner and correct title insurance is issued as noted in the escrow instructions.

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

The Escrow Holder Will:

  • Assemble escrow guidelines
  • Perform a title inquiry
  • Comply with the bank's standards as written in the escrow agreement
  • Receive funds from the buyer
  • Prorate tax, interest, insurance and other fees according to instructions
  • Record deeds and other legal documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse funds and finish instructions

The Escrow Holder Won't:

  • Offer advice - the escrow holder stays at an impartial, third-party status
  • Give insight about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow instructions
  • Request title search
  • Comply with the bank's requirements as specified in the escrow agreement
  • Accept funds from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other legal documents as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been met
  • Disburse payments and finalize instructions
  • Offer advice - the escrow company has to remain an impartial, third-party status
  • Give insight about future tax estimations

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

Once you're at ease with the escrow process, you can be a informed buyer.

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