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Escrow 101

 Latte Stone Properties, LLC can walk you through closing - (671) 647-5577
First, a little about "escrow". To finalize the sale of a place, a neutral, third party (the escrow holder) is brought into the picture to assure the transaction will close perfectly and on time. Escrow holders hold money for "safe-keeping" in transactions between a buyer and seller. PayPal is a good example of an escrow company.

The escrow company makes sure that all terms and conditions of the seller's and buyer's contract are performed prior to the sale being finished. This includes securing payments and documents, completing required forms, and obtaining the release documents for any loans or liens that have been paid off with the transaction, assuring you have a clean title to your house before the purchase price is fully paid.

These are the pieces of paperwork that escrow agents usually look for:

  • 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
  • Fire and other insurance policies

Upon finishing of all portions of the escrow, closing can take place. At this time, all payments and fees for inspections, title insurance and real estate commissions are collected. You'll then obtain the title to the property and the title insurance gets issued as noted in the escrow instructions.

The escrow agent gets a payment at the completion of closing. You'll know when it's time to submit the form of payment.

The Escrow Holder Will:

  • Write escrow instructions
  • Perform a title research
  • Meet the bank's requirements 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
  • Obtain 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 Won't:

  • Give advice - the escrow holder has to remain an impartial, third-party status
  • Dispense opinions about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow instructions
  • Perform a title research
  • Comply with the bank's standards as outlined in the escrow agreement
  • Accept funds from the buyer
  • Prorate insurance, tax, interest and other payments according to guidelines
  • Record deeds and other legal documents as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are complete
  • Disburse funds and finish instructions
  • Tell you what's best - the escrow company has to remain an impartial, 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. 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.

Now you know more about how to close on your future home. And, you can be a more informed home buyer and future homeowner.

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