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Escrow 101

 Park Property Group can walk you through closing -
First, a little about "escrow". When you're closing on your new house, an escrow holder is used to make certain the process will close properly and in a certain amount of time. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. PayPal is a good example of an escrow company.

The escrow holder insures that all terms and conditions of the seller's and buyer's negotiated agreement are completed prior to the sale being finished. This includes securing monies and documents, finishing required forms, and obtaining the release documents for any loans or liens that are to be paid off with the transaction, assuring you have a clear title to your property before the negotiated price is fully paid.

The certificates the escrow agent may secure include:

  • 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
  • Title insurance policies

You're ready to close when all parts are finished in escrow process. At this time, all payments and fees for inspections, title insurance and real estate commissions are taken. Title to the home is then transferred to you as now current homeowner and related title insurance is issued as outlined in the escrow instructions.

When closing is completed, you'll make a payment to the escrow company. As your real estate agent, I'll inform you of the acceptable way of paying.

The Escrow Holder Will:

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

The Escrow Holder Will Not:

  • Advise you - the escrow holder stays a neutral, third-party status
  • Dispense opinions about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow instructions
  • Petition title inquiry
  • Comply with the bank's guidelines as noted in the escrow agreement
  • Accept payments from the buyer
  • Prorate insurance, tax, interest 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 have been met
  • Disburse funds and finalize instructions
  • Tell you what's best - the escrow holder has to remain an impartial, third-party status
  • Give insight 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. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

This is a quick run-down of the escrow process. Your particular process may be different depending on your bank and your escrow agent.

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