How Escrow Works
Escrow 101
These are the documents that escrow holders usually look for:
- 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 complete. At this time, all payments and dues for inspections, title insurance and real estate commissions are taken. You’ll then receive the title to the home and the title insurance gets issued as noted in the escrow instructions.
The escrow holder gets a payment at the completion of closing. You’ll know when it’s time to submit the form of payment.
The Escrow Holder Will:
- Write escrow instructions
- Petition title inquiry
- Comply with lender’s guidelines as specified in the escrow agreement
- Receive funds from the buyer
- Prorate tax, interest, insurance and other fees according to instructions
- Record deeds and other legal documents as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer have been met
- Disburse payments and finalize instructions
The Escrow Holder Won’t:
- Offer advice – the escrow company stays a neutral, third-party status
- Dispense opinions about the outcome of your taxes
The Escrow Holder Will:
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The Escrow Holder Won’t:
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Mortgage Escrow Account
A Mortgage Escrow Account is established to make payments for recurring expenses 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.
This is a quick run-down of the escrow process. Your individual process could vary depending on your bank and your escrow agent.