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Completing the Transaction
First, a little about "escrow". When you're closing on your new place, an escrow agent is used to assure the transaction will close without problems and on time.
When money is held by a third party in a transaction between a buyer and a seller, it's in escrow.
For example, in an online purchase, PayPal is the reliable third party that obtains the buyer's payment, and then hands over the money to the seller.
The escrow company makes sure that the terms and conditions of the agreement between the two parties are met in preparation of the sale being finalized.
These are the legal documents that escrow agents 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 each step of the complete in escrow process.
At this time, all payments and fees for inspections, title insurance and real estate commissions are paid out.
You'll then obtain the title to the property and the title insurance gets dispersed as agreed upon in the escrow instructions.
The escrow company gets a payment when the closing is complete.
You'll know when it's time to submit the form of payment.
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The Escrow Holder Will: |
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The Escrow Holder Won't: |
- Assemble escrow guidelines
- Request title research
- Meet the bank's requirements as noted in the escrow agreement
- Accept payments from the buyer
- Prorate insurance, tax, interest and other payments according to guidelines
- Record deeds and other legal documents as instructed
- Request title insurance policy
- Close escrow when all terms of agreement of seller and buyer have been finished
- Disburse monies and finish instructions
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- Tell you what's best - the escrow holder must maintain a neutral, third-party status
- Dispense opinions about tax implications
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Mortgage Escrow Account
Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your 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.
Once you have the basics of the escrow process down, you can be a confident buyer.