Closing the Sale
First, a little about "escrow". To complete the sale of a home, a neutral, third party (the escrow agent) is engaged to assure the transaction will close correctly and on time.
When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow.
For example, in a Web auction, PayPal is the secure third party that obtains the buyer's cash, and then hands over the funds to the seller.
The escrow agent makes sure that the terms and conditions of the agreement between the sellers and the buyers are completed in preparation of the sale being completed.
These are the legal documents that escrow holders usually look to collect:
- 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
- Title insurance policies
Upon finishing of all portions of the escrow, closing can take place.
All debts and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions).
The house's title goes to you and title insurance begins per the policies of your individual escrow agreement.
At the close of escrow, fees are paid in an acceptable form to the escrow.
As your real estate professional, I'll inform you of the acceptable way of paying.
The Escrow Holder Will:
The Escrow Holder Won't:
- Prepare escrow guidelines
- Perform a title search
- Comply with lender's standards as outlined in the escrow agreement
- Intake payments from the buyer
- Prorate insurance, tax, interest and other payments according to guidelines
- Record deeds and other paperwork as instructed
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer are complete
- Disburse payments and finalize instructions
- Offer advice - the escrow holder must maintain a neutral, third-party status
- Dispense opinions about tax implications
Mortgage Escrow Account
A Mortgage Escrow Account is used to make payments for recurring fees while there is a loan on the house.
Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.
This is a easy to understand guide about the escrow process. Your individual methods might be slightly different based on your lender and your escrow company.