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

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Completing the Transaction

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Let's talk about "escrow". An escrow holder is hired to assure your house closes on time and the closing process goes smoothly. A property is said to be in escrow when in the closing process, money is held by a third party on behalf of two parties when the transaction is taking place. PayPal is a good example of an escrow company.

Settling the last details like taking in funds, signing forms, obtaining the documents for loans and liens, and assuring you get a clean title to the property in preparation of your purchase gets finalized are all part of the job of the escrow holder.

These are the records that escrow companies usually look to collect:

Loan documents
Tax statements
Fire and other insurance policies
Title insurance policies
Terms of sale and any seller-assisted financing
Requests for payment for various services to be paid out of escrow funds

Upon finishing of all portions of the escrow, closing can take place. At this time, all payments and dues for inspections, title insurance and real estate commissions are taken. You'll then secure the title to the property and the title insurance gets issued as agreed upon in the escrow instructions.

The escrow holder receives a payment when the closing is complete. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

Assemble escrow instructions
Perform a title search
Meet the bank's requirements as noted 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
Obtain title insurance policy
Close escrow when all terms of agreement of seller and buyer have been met
Disburse monies and finalize instructions

The Escrow Holder Won't:

Advise you - the escrow agent has to remain an impartial, third-party status
Give insight about future tax estimations

The Escrow Holder Will:		The Escrow Holder Won't:
Prepare escrow instructions Request title inquiry Comply with the bank's standards as outlined in the escrow agreement Intake payments from the buyer Prorate tax, interest, insurance and other fees according to instructions Record deeds and other paperwork as instructed Obtain title insurance policy Close escrow when all instructions of seller and buyer are complete Disburse monies and finalize instructions		Offer advice - the escrow holder must maintain a neutral, third-party status Dispense 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. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.

Once you have the basics of the escrow process down, you can be a better buyer.

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