Things to Expect When You're in Escrow

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Steps to Closing on a Property

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First, a little about "escrow". To finalize the sale of a home, a neutral, third party (the escrow company) is engaged to assure the process will close appropriately and on time. Escrow companies hold money for "safe-keeping" in transactions between a buyer and seller. For example, in an Internet purchase, PayPal is the secure third party that obtains the buyer's payment, and then sends the money to the seller.

Tying up any loose ends like obtaining funds, finishing forms, securing the documents for loans and liens, and making sure you get a spotless title to the property before your purchase gets finalized are all parts of closing in which an escrow holder is useful.

These are the legal documents that escrow holders usually compile:

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

You're ready to close when every step is done in escrow process. All debts and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then get the title to the property and the title insurance gets dispersed as noted in the escrow instructions.

At the close of escrow, payments of funds are made in an acceptable form to the escrow. As your REALTOR, I'll let you know what is an acceptable way of paying.

The Escrow Holder Will:

Write escrow instructions
Petition title research
Comply with the bank's guidelines as written in the escrow agreement
Intake 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 instructions of seller and buyer have been finished
Disburse payments and finish instructions

The Escrow Holder Will Not:

Give advice - the escrow holder must maintain a neutral, third-party status
Offer opinions about future tax estimations

The Escrow Holder Will:		The Escrow Holder Won't:
Assemble escrow guidelines Request title search Comply with lender's guidelines as written in the escrow agreement Receive funds from the buyer Prorate interest, insurance, tax and other payments according to guidelines Record deeds and other legal documents as instructed Obtain title insurance policy Close escrow when all instructions of seller and buyer are complete Disburse payments and finalize instructions		Give advice - the escrow company has to remain an impartial, third-party status Dispense opinions about tax implications

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.

This is a easy to understand guide about the escrow process. Your particular methods may be different depending on your lender and your escrow company.

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