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What is Escrow?
Escrow: A neutral, third party (known as the escrow holder or the escrow agent) is brought on to assure your place closes on time and the process goes smoothly.
Escrow holders hold money for "safe-keeping" in a deal between a buyer and seller.
For example, in an online auction, PayPal is the neutral third party that holds the buyer's funds, and then sends the funds to the seller.
The escrow company makes sure that the terms and conditions of the agreement between the two parties are reached in preparation of the sale being finished.
Escrow agents want to acquire the following pieces of paperwork:
- 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
- Fire and other insurance policies
Closing on the house takes place when all of the procedures of the escrow are done.
At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out.
The house's title is given to you and title insurance begins per the steps of your individual escrow process.
When closing is completely finished, you'll submit a payment to the escrow agent.
I'll keep you informed on what comes next.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow instructions
- Petition title search
- Comply with the bank's standards as noted in the escrow agreement
- Accept payments from the buyer
- Prorate tax, interest, insurance and other fees 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 met
- Disburse monies and finish instructions
- Advise you - the escrow company has to remain an impartial, third-party status
- Dispense opinions about tax implications
Mortgage Escrow Account
A Mortgage Escrow Account is used to make payments for on-going fees while there is a loan on the house.
Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.
Now you know more about how to close on your future home. And, you can be a smarter home buyer and future homeowner.
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