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What is Escrow?

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Let's talk about "escrow". An escrow agent is used to assure your home closes on time and the process goes smoothly. A property is said to be in escrow when in the closing transaction, payment is held by a third party on behalf of two parties when the exchange of money takes place. For example, in an online auction, PayPal is the reliable third party that holds the buyer's cash, and then disburses the funds to the seller.

The escrow agent makes sure that the terms and conditions of the agreement between the seller and buyer are performed prior to the sale being completed.

Escrow holders collect the following records:

  • 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

You're ready to close when all steps are finished in escrow process. All debts and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the home is then given to you as buyer and correct title insurance is issued as outlined in the escrow instructions.

The escrow company gets a payment at the completion of closing. I'll keep you up-to-date on what comes next.

The Escrow Holder Will:

  • Prepare escrow guidelines
  • Request title research
  • Comply with the bank's guidelines as written in the escrow agreement
  • Accept payments from the buyer
  • Prorate interest, insurance, tax and other payments according to guidelines
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer have been met
  • Disburse funds and finalize instructions

The Escrow Holder Will Not:

  • Give advice - the escrow holder stays a neutral, third-party status
  • Give insight about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow guidelines
  • Perform a title research
  • Comply with the bank's requirements as noted in the escrow agreement
  • Receive payments from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other documents as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been met
  • Disburse monies and finish instructions
  • Give advice - the escrow agent stays a neutral, third-party status
  • Give insight about tax implications

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

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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In Home Realty

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319 E San Bernardino Road
Covina, CA 91723-1627