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Escrow 101

 Florida Homes Realty & Mortgage can walk you through closing - 904-710-0241
Escrow: A neutral, third party (known as the escrow holder or the escrow agent) is hired to assure your house closes on time and the closing process goes smoothly. 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 when the exchange of money takes place. An everyday way to understand the concept of what an escrow company does is to compare it to PayPal for online purchases.

The escrow company makes sure that all terms and conditions of the seller's and buyer's contract are completed prior to the sale being finalized. This includes getting funds and certificates, filling out required forms, and seeking out the release documents for any loans or liens that have been paid with the transaction, assuring you have a clear title to your place before the negotiated price is fully paid.

The pieces of paperwork the escrow agent may obtain 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

Closing on the home happens when all of the procedures of the escrow are done. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. You'll then receive the title to the property and the title insurance gets issued as agreed upon in the escrow instructions.

When closing is done, you'll make a payment to the escrow agent. I'll keep you informed on the procedure.

The Escrow Holder Will:

  • Assemble escrow guidelines
  • Petition title search
  • Meet lender's requirements 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 legal documents as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse funds and finalize instructions

The Escrow Holder Won't:

  • Offer advice - the escrow agent must stay at a fair, third-party status
  • Dispense opinions about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Perform a title inquiry
  • Comply with lender's standards as noted in the escrow agreement
  • Accept payments from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other documents as instructed
  • Request title insurance policy
  • Close escrow when all instructions of seller and buyer have been met
  • Disburse monies and finish instructions
  • Advise you - the escrow holder has to remain an impartial, third-party status
  • Give insight about tax implications

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. 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 smarter home buyer and future homeowner.

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