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What is Escrow?

 Park Property Group can walk you through closing -
First, a little about "escrow". To finalize the sale of a house, a neutral, third party (the escrow holder) is employed to assure the process will close appropriately and on time. A place is said to be in escrow when in the closing transaction, funds is held by a third party on behalf of two parties when the exchange of money takes place. A simple way to understand the concept of what an escrow company does is to compare it to PayPal for online purchases.

The escrow company makes sure that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being finished. This includes getting monies and paperwork, completing required forms, and obtaining the release documents for any loans or liens that were paid off with the transaction, assuring you have a clear title to your house before the asking price is fully paid.

Escrow holders compile the following forms:

  • 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
  • Loan documents
  • Tax statements

You're ready to close when each step of the done in escrow process. All payments owed and fees are taken and paid off 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 noted in the escrow instructions.

The escrow agent gets a payment at the completion of closing. As your real estate professional, I'll let you know what is an acceptable form of payment.

The Escrow Holder Will:

  • Write escrow guidelines
  • Request title inquiry
  • Meet lender's guidelines as specified in the escrow agreement
  • Intake payments from the buyer
  • Prorate tax, interest, insurance and other fees 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 finished
  • Disburse monies and finish instructions

The Escrow Holder Will Not:

  • Advise you - the escrow holder stays a neutral, third-party status
  • Dispense opinions about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow guidelines
  • Petition title search
  • Comply with lender's standards as outlined in the escrow agreement
  • Intake funds from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other documents as instructed
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse payments and finish instructions
  • Advise you - the escrow agent stays a neutral, third-party status
  • Give insight about the outcome of your taxes

Mortgage Escrow Account

A Mortgage Escrow Account is established 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 how to close on your future home. And, you can be a smarter home buyer and future homeowner.

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