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Escrow 101

 Salvo Real Estate Services can walk you through closing - 561-441-5978
First, a little about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is used to assure your home 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. For example, in an Internet transaction, PayPal is the secure third party that obtains the buyer's payment, and then sends the funds to the seller.

The escrow agent makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are reached prior to the sale being completed. This includes getting payments and certificates, finishing required forms, and obtaining the release documents for any loans or liens that have been paid with the transaction, assuring you have a clean title to your place before the negotiated price is fully paid.

The pieces of paperwork the escrow holder may secure include:

  • 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
  • Title insurance policies

Upon finishing of all portions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. You'll then secure the title to the property and the title insurance gets dispersed as agreed upon in the escrow instructions.

At the close of escrow, payments are submitted in an acceptable form to the escrow. As your real estate professional, I'll let you know what is an acceptable form of payment.

The Escrow Holder Will:

  • Prepare escrow instructions
  • Perform a title search
  • Comply with the bank's guidelines as noted 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
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse payments and finalize instructions

The Escrow Holder Won't:

  • Advise you - the escrow company must maintain a neutral, third-party status
  • Offer opinions about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow guidelines
  • Perform a title inquiry
  • Meet the bank's standards as outlined in the escrow agreement
  • Intake payments from the buyer
  • Prorate tax, interest, insurance and other fees according to instructions
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been finished
  • Disburse payments and finish instructions
  • Advise you - the escrow holder stays a neutral, third-party status
  • Dispense opinions about tax implications

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

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

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