Understanding how Escrow works – Provident Realty Group, Dublin, CA

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Escrow: When you're closing on your new house, an escrow holder is used to assure the transaction will close appropriately and on time. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an online auction, PayPal is the neutral third party that holds the buyer's money, and then hands over the money to the seller.

The escrow agent makes sure that the terms and conditions of the agreement between the sellers and the buyers are met prior to the sale being finalized.

These are the documents that escrow agents usually compile:

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 each step of the done in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then transferred to you as buyer and related title insurance is issued as outlined in the escrow policy.

When closing is finished, you'll pay the fees to the escrow agent. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

Write escrow instructions
Request title research
Meet lender's requirements as specified in the escrow agreement
Intake funds from the buyer
Prorate interest, insurance, tax and other payments according to guidelines
Record deeds and other documents as instructed
Request title insurance policy
Close escrow when all terms of agreement of seller and buyer are complete
Disburse funds and finish instructions

The Escrow Holder Will Not:

Offer advice - the escrow agent stays a neutral, third-party status
Give insight about the outcome of your taxes

The Escrow Holder Will:		The Escrow Holder Won't:
Write escrow instructions Request title research Comply with the bank's standards as noted in the escrow agreement Intake funds from the buyer Prorate tax, interest, insurance and other fees according to instructions Record deeds and other legal documents as instructed Request title insurance policy Close escrow when all instructions of seller and buyer are met Disburse monies and finalize instructions		Offer advice - the escrow holder must stay at a fair, third-party status Give insight about future tax estimations

Mortgage Escrow Account

A Mortgage Escrow Account is used to make payments for rolling fees 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.

Now you know more about how to close on your future home. And, you can be a smarter home buyer and future homeowner.

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