Rules for Using an Escrow Company

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Completing the Transaction

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First, a little about "escrow". When you're closing on your new home, an escrow holder is used to assure the process will close without problems and in a specific time frame. When funds are 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 cash, and then hands over the money to the seller.

The escrow company makes sure that the terms and conditions of the agreement between the seller and buyer are reached in preparation of the sale being finished.

The records the escrow company may secure include:

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

Closing on the home takes place when all of the procedures of the escrow are done. All expenses like title insurance, inspections and real estate commissions are paid. You'll then receive the title to the property and the title insurance gets issued as noted in the escrow instructions.

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

The Escrow Holder Will:

Write escrow instructions
Petition title research
Meet lender's requirements as written in the escrow agreement
Accept payments from the buyer
Prorate interest, insurance, tax and other payments according to instructions
Record deeds and other paperwork as instructed
Obtain title insurance policy
Close escrow when all instructions of seller and buyer are met
Disburse funds and finalize instructions

The Escrow Holder Will Not:

Tell you what's best - the escrow holder stays at an impartial, third-party status
Give insight about the outcome of your taxes

The Escrow Holder Will:		The Escrow Holder Won't:
Assemble escrow instructions Perform a title search Meet the bank's standards as written in the escrow agreement Receive payments from the buyer Prorate tax, interest, insurance and other fees according to guidelines Record deeds and other documents as instructed Obtain title insurance policy Close escrow when all terms of agreement of seller and buyer have been finished Disburse funds and finish instructions		Give advice - the escrow holder stays a neutral, third-party status Offer opinions about future tax estimations

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your 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 more confident home buyer and future homeowner.

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