How Escrow Works

Closing the Sale in Las Vegas, Nevada

Let’s talk about “escrow”. When you’re closing on your new property, a neutral, third party (known as the escrow holder or the escrow agent) is used to assure the transaction will close correctly and on time. A home is said to be in escrow when in the closing process, money is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. For example, in an online purchase, PayPal is the secure third party that holds the buyer’s payment, and then sends the money to the seller.Settling the last details like receiving funds, completing forms, getting the documents for loans and liens, and assuring you get a spotless title to the home prior to your purchase gets finalized are all part of the job of the escrow holder.

The certificates the escrow holder may obtain include:

You’re ready to close when all steps are finished in escrow process. All payments owed and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). The home’s title goes to you and title insurance is issued per the steps of your particular escrow agreement.

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

The Escrow Holder Will:

  • Write escrow instructions
  • Perform a title search
  • Comply with the bank’s standards as specified in the escrow agreement
  • Intake funds from the buyer
  • Prorate insurance, tax, interest and other payments according to guidelines
  • Record deeds and other documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse funds and finish instructions

The Escrow Holder Will Not:

  • Give advice – the escrow company must stay at a fair, third-party status
  • Dispense opinions about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won’t:
  • Assemble escrow instructions
  • Request title research
  • Comply with the bank’s guidelines as specified in the escrow agreement
  • Receive funds from the buyer
  • Prorate interest, insurance, tax and other payments according to guidelines
  • Record deeds and other legal documents as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been met
  • Disburse monies and finalize instructions
  • Offer advice – the escrow holder must stay at a fair, third-party status
  • Give insight about future tax estimations

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there’s a loan on your house. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

Once you have the rules of the escrow process down, you can be a confident buyer.

 

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