How Escrow Works
Escrow
To finalize the sale of the home a neutral, third party (the escrow holder,
a.k.a. escrow agent) is engaged to assure the transaction will close properly
and on time. The escrow holder insures that all terms and conditions of the seller's
and buyer's agreement are met prior to the sale being finalized, including
receiving funds and documents, completing required forms, and obtaining the
release documents for any loans or liens that have been paid off with the
transaction, assuring you clear title to your property before the purchase
price is fully paid.
The documentation the escrow holder may be collecting includes:
- Loan documents
- 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
Upon completion
of all instructions of the escrow, closing can take place. All outstanding
payments and fees are collected and paid at this time (covering expenses such
as title insurance, inspections, real estate commissions). Title to the
property is then transferred to the seller and appropriate title insurance is
issued as outlined in the escrow instructions.
At the close of
escrow, payment of funds shall be made in an acceptable form to the escrow. As
your real estate agent, I'll inform you of the acceptable form.
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The Escrow Holder
Will: |
The Escrow Holder
Won't: |
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Mortgage Escrow Account
A Mortgage Escrow Account is established to pay on-going expenses while there is a loan on the house. These expenses include property taxes, home insurance, mortgage insurance, and other escrow items. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.
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