Understanding how Escrow works – Excel Realty and Mortgage, Turlock, CA

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First-Time Home Buying: How To Close on a Place

Excel Realty and Mortgage can walk you through closing -

First, a little about "escrow". An escrow company is brought on to assure your property closes on time and the closing process goes smoothly. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. A simple 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 met prior to the sale being finished. This includes securing monies and records, completing required forms, and obtaining the release documents for any loans or liens that are to be paid with the transaction, assuring you have a free title to your place before the purchase price is fully paid.

Escrow agents look for the following documents:

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 completion of all instructions of the escrow, closing can take place. At this time, all payments and fees for inspections, title insurance and real estate commissions are taken. The home's title gets transferred to you and title insurance is issued per the steps of your particular escrow agreement.

At the close of escrow, in an acceptable form to the escrow. As your REALTOR, I'll let you know what is an acceptable form of payment.

The Escrow Holder Will:

Assemble escrow instructions
Request title research
Meet lender's guidelines as outlined 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 payments and finish instructions

The Escrow Holder Will Not:

Give advice - the escrow company must maintain a neutral, third-party status
Give insight about the outcome of your taxes

The Escrow Holder Will:		The Escrow Holder Won't:
Write escrow guidelines Perform a title research Comply with the bank's guidelines as written 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 complete Disburse payments and finalize instructions		Give advice - the escrow agent must stay at a fair, third-party status Dispense opinions about the outcome of your taxes

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

Once you have the ABCs of the escrow process down, you can be a better buyer.

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