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Completing the Transaction

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Escrow: To finish the sale of a house, a neutral, third party (the escrow holder) is employed to assure the process will close correctly and on time. A place is said to be in escrow when in the closing transaction, funds is secured by a third party on behalf of a buyer and a seller when the transaction is taking place. For example, in a Web transaction, PayPal is the neutral third party that obtains the buyer's funds, and then hands over the payment to the seller.

The escrow holder makes sure that the terms and conditions of the agreement between the sellers and the buyers are completed in preparation of the sale being finalized.

These are the documents that escrow holders usually compile:

  • 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
  • Terms of sale and any seller-assisted financing

Upon completion of all portions of the escrow, closing can take place. All payments owed and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). The property's title gets transferred to you and title insurance begins per the policies of your individual escrow agreement.

At the close of escrow, payment of funds shall be made in an acceptable form to the escrow. As your agent, I'll inform you of the acceptable way of paying.

The Escrow Holder Will:

  • Assemble escrow instructions
  • Perform a title search
  • Meet the bank's requirements as noted in the escrow agreement
  • Accept funds 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 terms of agreement of seller and buyer are complete
  • Disburse payments and finalize instructions

The Escrow Holder Won't:

  • Tell you what's best - the escrow agent stays at an impartial, third-party status
  • Offer opinions about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow guidelines
  • Perform a title research
  • Meet the bank's standards as noted in the escrow agreement
  • Receive funds from the buyer
  • Prorate insurance, tax, interest 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
  • Tell you what's best - the escrow company must maintain a neutral, third-party status
  • Offer opinions about the outcome of your taxes

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your 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 quick run-down of the escrow process. Your particular process might be different based on your bank and your escrow agent.