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What is Escrow?

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Let's talk about "escrow". When you're closing on your new house, an escrow holder is used to assure the process will close without problems 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. For example, in a Web purchase, PayPal is the neutral third party that holds the buyer's cash, and then disburses the payment to the seller.


Settling the last details like receiving funds, signing forms, securing 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 company is useful.

The pieces of paperwork the escrow holder may secure include:

  • Loan documents
  • Tax statements
  • 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

You're ready to close when every step is finished in escrow process. At this time, all payments and fees for inspections, title insurance and real estate commissions are taken. Title to the property is then given to you as buyer and related title insurance is issued as noted in the escrow policy.

At the close of escrow, payment of funds shall be made in an acceptable form to the escrow. We'll keep you informed on the next steps.

The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Perform a title research
  • Comply with the bank's guidelines as noted in the escrow agreement
  • Receive payments from the buyer
  • Prorate tax, interest, insurance and other fees according to guidelines
  • Record deeds and other legal documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse monies and finish instructions
  • Advise you - the escrow company 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. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.

Now you know more about how to close on your future home. And, you can be a smarter home buyer and future homeowner.