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What is Escrow?

 Latte Stone Properties, LLC can walk you through closing - (671) 647-5577
First, a little about "escrow". When you're closing on your new property, a neutral, third party (known as the escrow holder or the escrow agent) is used to make sure the process will close correctly and in a certain amount of time. A house is said to be in escrow when in the closing process, funds is secured by a third party on behalf of a buyer and a seller when the exchange of money takes place. For example, in an online purchase, PayPal is the reliable third party that obtains the buyer's money, and then hands over the payment to the seller.

The escrow agent insures that all terms and conditions of the seller's and buyer's negotiated agreement are reached prior to the sale being finalized. This includes securing funds and documents, filling out required forms, and seeking out the release documents for any loans or liens that are to be cleared with the transaction, assuring you have a clean title to your property before the final price is fully paid.

Escrow holders look for the following forms:

  • 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

You're ready to close when every step is finished in escrow process. All debts and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then secure the title to the property and the title insurance gets issued as stated in the escrow instructions.

At the close of escrow, payments of funds are made 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 guidelines
  • Perform a title search
  • Meet lender's standards as noted in the escrow agreement
  • Receive funds from the buyer
  • Prorate insurance, tax, interest and other payments according to guidelines
  • Record deeds and other 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

The Escrow Holder Won't:

  • Give advice - the escrow company stays at an impartial, third-party status
  • Dispense opinions about future tax estimations
The Escrow Holder Will:
The Escrow Holder Won't:
  • Prepare escrow instructions
  • Request title inquiry
  • Comply with the bank's standards as noted in the escrow agreement
  • Accept payments from the buyer
  • Prorate tax, interest, insurance and other fees according to instructions
  • Record deeds and other documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are complete
  • Disburse payments and finish instructions
  • Advise you - the escrow agent stays a neutral, third-party status
  • Give insight 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. 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.

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

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