The process of buying a house for the first time can be confusing. Crown Realty and Financial can help.
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What is Escrow?
Let's talk about "escrow". When you're closing on your new property, an escrow holder is used to assure the process will close appropriately and in a timely manner.
Escrow agents hold money for "safe-keeping" in an exchange between a buyer and seller.
For example, in an online transaction, PayPal is the secure third party that holds the buyer's funds, and then hands over the funds to the seller.
The escrow holder is careful to assure that all terms and conditions of the seller's and buyer's contract are met prior to the sale being finished. This includes getting monies and paperwork, finishing 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 home or investment property before the final price is fully paid.
Escrow companies collect the following documents:
- 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
- Terms of sale and any seller-assisted financing
You're ready to close when every step is complete in the escrow process - all expenses like title insurance, inspections and real estate commissions are paid.
Title to the house is then given to you as the new owner and appropriate title insurance is issued as outlined in the escrow policy.
At the close of escrow, fees are paid in an acceptable form to the escrow.
As your REALTOR, the team at Crown Realty and Financial will let you know what is an acceptable form of payment.
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The Escrow Holder Will: |
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The Escrow Holder Won't: |
- Assemble escrow guidelines
- Perform a title inquiry
- Meet lender's requirements as outlined 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
- Obtain title insurance policy
- Close escrow when all instructions of seller and buyer are complete
- Disburse payments and finalize instructions
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- Offer advice - the escrow holder must stay at a fair, third-party status
- Give insight about the outcome of your taxes
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Mortgage Escrow Account
Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created.
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.
Once you're comfortable with the escrow process, you can be a better buyer.