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What is Escrow?

 Stoneridge Realty & Property Management Services can walk you through closing - 7607273776
Let's talk about "escrow". To finalize the sale of a home, a neutral, third party (the escrow company) is engaged to assure the process will close perfectly and on time. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. An easy way to understand what an escrow company does is to compare it to PayPal for online purchases.

The escrow agent makes sure that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being completed. This includes getting payments and documents, completing required forms, and seeking out the release documents for any loans or liens that are to be paid off with the transaction, assuring you have a clear title to your place before the agreed upon price is fully paid.

These are the legal documents that escrow holders usually compile:

  • 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 instructions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. The home's title gets transferred to you and title insurance begins per the steps of your particular escrow process.

When closing is completed, you'll make a payment to the escrow company. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Write escrow instructions
  • Petition title search
  • Comply with lender's guidelines as written in the escrow agreement
  • Accept payments from the buyer
  • Prorate interest, insurance, tax and other payments according to guidelines
  • Record deeds and other paperwork as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are met
  • Disburse monies and finalize instructions

The Escrow Holder Won't:

  • Advise you - the escrow company stays a neutral, third-party status
  • Offer opinions about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow guidelines
  • Petition title search
  • Meet the bank's guidelines as outlined in the escrow agreement
  • Intake funds from the buyer
  • Prorate tax, interest, insurance and other fees according to guidelines
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse monies and finish instructions
  • Offer advice - the escrow company must maintain a neutral, third-party status
  • Dispense opinions about the outcome of your taxes

Mortgage Escrow Account

A Mortgage Escrow Account is established to make payments for rolling expenses 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 process might be different based on your lender and your escrow company.


Stoneridge Realty & Property Management Services

1920 Shadowridge Drive #104
Vista, CA 92081