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Escrow 101

 The Virtual Real Estate Team can walk you through closing - (405) 509-5335
Let's talk about "escrow". An escrow agent is hired to assure your place closes on time and the transaction goes smoothly. When money 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 company is careful to assure that all terms and conditions of the seller's and buyer's agreement are met prior to the sale being finished. This includes getting funds and certificates, signing required forms, and obtaining the release documents for any loans or liens that have been cleared with the transaction, assuring you have a clean title to your property before the final price is fully paid.

These are the legal documents that escrow agents usually look for:

  • 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 every step is complete in escrow process. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. Title to the house is then transferred to you as new owner and appropriate title insurance is issued as outlined in the escrow instructions.

When closing is completely finished, you'll make a payment to the escrow holder. As your agent, I'll let you know what is an acceptable way of paying.

The Escrow Holder Will:

  • Write escrow instructions
  • Petition title inquiry
  • Comply with lender's requirements as outlined in the escrow agreement
  • Receive funds from the buyer
  • Prorate interest, insurance, tax 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 are complete
  • Disburse funds and finalize instructions

The Escrow Holder Won't:

  • Tell you what's best - the escrow company must stay at a fair, third-party status
  • Dispense opinions about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow instructions
  • Perform a title inquiry
  • Comply with the bank's standards as specified in the escrow agreement
  • Receive payments from the buyer
  • Prorate interest, insurance, tax and other payments according to guidelines
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse payments and finalize instructions
  • Give advice - the escrow agent has to remain an impartial, third-party status
  • Dispense opinions about the outcome of your taxes

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.

Now you know more about being in escrow. And, you can be a more confident home buyer and future homeowner.

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