Understanding how Escrow works – ADC Realty - Dr. Mohammed Karim, Coachella Valley, CA

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Let's talk about "escrow". To close the sale of a house, a neutral, third party (the escrow holder) is brought into the picture to assure the transaction will close appropriately and on time. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. PayPal is a simple way to think of an escrow company.

The escrow agent makes sure that the terms and conditions of the agreement between the sellers and the buyers are performed prior to the sale being finalized.

These are the pieces of paperwork that escrow agents usually compile:

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
Terms of sale and any seller-assisted financing

You're ready to close when every step is complete in escrow process. All debts and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then obtain the title to the home and the title insurance gets dispersed as outlined in the escrow instructions.

At the close of escrow, in an acceptable form to the escrow. I'll keep you informed on the next steps.

The Escrow Holder Will:

Prepare escrow guidelines
Petition title search
Meet the bank's standards as outlined in the escrow agreement
Accept funds from the buyer
Prorate tax, interest, insurance and other fees according to guidelines
Record deeds and other paperwork as instructed
Obtain title insurance policy
Close escrow when all instructions of seller and buyer are complete
Disburse funds and finish instructions

The Escrow Holder Won't:

Tell you what's best - the escrow company stays a neutral, third-party status
Give insight about tax implications

The Escrow Holder Will:		The Escrow Holder Won't:
Assemble escrow guidelines Petition title inquiry Meet lender's guidelines as written in the escrow agreement Accept funds from the buyer Prorate tax, interest, insurance and other fees according to guidelines Record deeds and other legal documents as instructed Obtain title insurance policy Close escrow when all instructions of seller and buyer have been met Disburse monies and finalize instructions		Offer advice - the escrow agent stays a neutral, third-party status Give insight 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. Generally, the Escrow Account is partially funded at closing and the home buyer makes on-going contributions through their monthly mortgage payment.

This is a easy to understand guide about the escrow process. Your specific methods may be slightly different depending on your lender and your escrow company.

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