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What is Escrow?

 Craig Jelinek - Sereno Group can walk you through closing - 408-335-1425
First, a little about "escrow". An escrow holder is used to assure your house closes on time and the closing process goes smoothly. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. An easy way to understand the concept of what an escrow company does is to think of the use of PayPal for online purchases.

The escrow holder makes sure that the terms and conditions of the agreement between the two parties are reached in preparation of the sale being finished.

Escrow agents collect the following records:

  • 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

You're ready to close when each step of the done in escrow process. At this time, all payments and fees for inspections, title insurance and real estate commissions are taken. You'll then get the title to the house and the title insurance gets dispersed as noted in the escrow instructions.

At the close of escrow, in an acceptable form to the escrow. As your real estate agent, I'll inform you of the acceptable way of paying.

The Escrow Holder Will:

  • Prepare escrow instructions
  • Petition title research
  • Meet the bank's standards as outlined in the escrow agreement
  • Accept payments 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 have been met
  • Disburse funds and finalize instructions

The Escrow Holder Will Not:

  • Offer advice - the escrow holder stays at an impartial, third-party status
  • Give insight about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow guidelines
  • Petition title research
  • Comply with lender's standards as noted in the escrow agreement
  • Accept funds from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other documents as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been met
  • Disburse payments and finalize instructions
  • Offer advice - the escrow holder has to remain an impartial, third-party status
  • Dispense opinions 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. 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 easy to understand guide about the escrow process. Your specific plan might vary depending on your lender and your escrow holder.

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