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Escrow 101

 Mickey Hambright can walk you through closing - 828-817-1796
Let's talk about "escrow". When you're closing on your new property, an escrow holder is used to make sure the transaction will close properly and in a certain amount of time. Escrow companies hold money for "safe-keeping" in an exchange between a buyer and seller. For example, in an Internet transaction, PayPal is the secure 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, obtaining the documents for loans and liens, and making sure you get a clear title to the home prior to your purchase gets finalized are all part of the job of the escrow company.

These are the legal forms that escrow companies usually look for:

  • 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
  • Loan documents

Closing on the home takes place when the steps of the escrow are done. 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 now current homeowner and correct title insurance is issued as outlined in the escrow policy.

At the close of escrow, payments of funds are made in an acceptable form to the escrow. I'll keep you informed on the procedure.

The Escrow Holder Will:

  • Assemble escrow instructions
  • Petition title research
  • Meet the bank's guidelines as noted in the escrow agreement
  • Accept funds from the buyer
  • Prorate tax, interest, insurance and other fees according to instructions
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer have been met
  • Disburse payments and finalize instructions

The Escrow Holder Won't:

  • Tell you what's best - the escrow agent must maintain a neutral, third-party status
  • Give insight about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow guidelines
  • Request title inquiry
  • Meet the bank's guidelines as outlined in the escrow agreement
  • Receive payments from the buyer
  • Prorate interest, insurance, tax and other payments 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 finalize instructions
  • Give advice - the escrow company stays a neutral, third-party status
  • Give insight about tax implications

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

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