Using an Escrow Agent
An escrow holder is used to assure your place closes on time and the process goes smoothly. A property is said to be in escrow when in the closing transaction, payment is held by a third party on behalf of a buyer and a seller when the transaction is taking place. An everyday way to understand the concept of what an escrow company does is to think of the use of PayPal for online purchases.
The escrow company makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are performed prior to the sale being finalized. This includes getting funds and records, finishing required forms, and seeking out the release documents for any loans or liens that have been cleared with the transaction, assuring you have a clear title to your house before the asking price is fully paid.
Escrow companies compile the following records:
- 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
Closing on the house takes place when the steps of the escrow are done. At this time, all payments and dues for inspections, title insurance and real estate commissions are collected. Title to the property is then transferred to you as now current homeowner and appropriate 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.
Mortgage Escrow Account
A Mortgage Escrow Account is used to pay rolling fees while there is a loan on the house. Escrow Accounts are contributed to monthly by the home buyer (who is now the homeowner), but there is also a lump sum that goes into the account at closing.
Now you know more about being in escrow. And, you can be a smarter home buyer and future homeowner.