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Escrow 101

 Venice Hometown Realty, LLC can walk you through closing - (941) 306-3059
Let's talk about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is used to assure your place closes on time and the process goes smoothly. Escrow companies hold money for "safe-keeping" in a deal between a buyer and seller. An easy way to understand the concept of what an escrow company does is to think of the use of PayPal for online purchases.

Tying up any loose ends like receiving funds, finishing forms, securing the documents for loans and liens, and assuring you get a clean title to the home in preparation of your purchase gets finalized are all parts of closing in which an escrow agent is useful.

Escrow holders collect the following pieces of paperwork:

  • 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
  • Fire and other insurance policies

Upon completion of all instructions of the escrow, closing can take place. All debts and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the home is then transferred to you as new homeowner and related title insurance is issued as noted in the escrow instructions.

At the close of escrow, payment of funds shall be made in an acceptable form to the escrow. As your REALTOR, I'll inform you of the acceptable way of paying.

The Escrow Holder Will:

  • Prepare escrow guidelines
  • Perform a title research
  • Comply with lender's requirements as noted in the escrow agreement
  • Accept funds from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are met
  • Disburse payments and finish instructions

The Escrow Holder Will Not:

  • Give advice - the escrow company must stay at a fair, third-party status
  • Give insight about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow guidelines
  • Request title search
  • Meet lender's requirements as written in the escrow agreement
  • Intake funds from the buyer
  • Prorate insurance, tax, interest and other payments according to guidelines
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer have been finished
  • Disburse payments and finish instructions
  • Tell you what's best - the escrow holder stays a neutral, third-party status
  • Give insight about tax implications

Mortgage Escrow Account

A Mortgage Escrow Account is established to pay on-going 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.

This is a simple outline of the escrow process. Your particular plan may be unique depending on your bank and your escrow agent.

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