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Escrow 101

 Stoneridge Realty & Property Management Services can walk you through closing - 760-727-3776
Escrow: A neutral, third party (known as the escrow holder or the escrow agent) is brought on to assure your home closes on time and the transaction goes smoothly. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. An everyday way to understand what an escrow company does is to think of the use of PayPal for online purchases.

The escrow company makes sure that all terms and conditions of the seller's and buyer's contract are met prior to the sale being finalized. This includes getting monies and documents, completing required forms, and obtaining the release documents for any loans or liens that were paid with the transaction, assuring you have a clean title to your place before the agreed upon price is fully paid.

The documents the escrow holder may secure include:

  • 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
  • Tax statements

Closing on the property takes place when the steps of the escrow are finished. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. Title to the home is then given to you as now current homeowner and correct title insurance is issued as outlined in the escrow instructions.

At the close of escrow, fees are paid in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Prepare escrow instructions
  • Petition title inquiry
  • Comply with lender's guidelines as specified in the escrow agreement
  • Accept funds from the buyer
  • Prorate interest, insurance, tax and other payments according to guidelines
  • 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 monies and finish instructions

The Escrow Holder Won't:

  • Offer advice - the escrow company must maintain a neutral, third-party status
  • Give insight about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow instructions
  • Request title search
  • Comply with lender's guidelines as written in the escrow agreement
  • Receive payments from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other legal documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer have been finished
  • Disburse funds and finish instructions
  • Tell you what's best - the escrow holder has to remain an impartial, third-party status
  • Dispense opinions about the outcome of your taxes

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.

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