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What is Escrow?

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First, a little about "escrow". When you're closing on your new home, an escrow agent is used to make certain the transaction will close appropriately and in a specific time frame. A place is said to be in escrow when in the closing transaction, payment is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. PayPal is a good way to picture an escrow company.

Tying up any loose ends like receiving funds, completing forms, obtaining the documents for loans and liens, and making sure you get a spotless title to the house in preparation of your purchase gets finalized are all parts of closing in which an escrow agent is useful.

Escrow companies want to acquire the following legal documents:

  • 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

Closing on the house happens when all of the procedures of the escrow are finished. All payments owed and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then obtain the title to the property and the title insurance gets issued as outlined in the escrow instructions.

The escrow agent receives a payment at the completion of closing. As your real estate professional, I'll inform you of the acceptable form of payment.

The Escrow Holder Will:

  • Assemble escrow instructions
  • Request title research
  • Comply with lender'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 legal documents 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 Will Not:

  • Offer advice - the escrow holder must stay at a fair, third-party status
  • Give insight about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow guidelines
  • Perform a title inquiry
  • Comply with the bank's requirements as written in the escrow agreement
  • Intake funds from the buyer
  • Prorate tax, interest, insurance and other fees according to guidelines
  • Record deeds and other documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are met
  • Disburse payments and finish instructions
  • Offer advice - the escrow holder stays at an impartial, third-party status
  • Give insight about future tax estimations

Mortgage Escrow Account

A Mortgage Escrow Account is started to pay 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.

Now you know more about being in escrow. And, you can be a smarter home buyer and future homeowner.

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Provident Realty Group

6850 Regional Street Suite 210
Dublin, CA 94568