Understanding how Escrow works – Erik Berry, Redondo Beach, CA

Buying a house for the first time can be intimidating. Let me help you. E-mail me at erikberry@hotmail.com to get some free information.

Buying Your Next Property: Closing

Erik Berry can walk you through closing - 3107804422

Let's talk about "escrow". When you're closing on your new place, a neutral, third party (known as the escrow holder or the escrow agent) is used to make sure the transaction will close without problems and in a specific time frame. 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 company makes sure that the terms and conditions of the agreement between the two parties are reached in preparation of the sale being completed.

These are the documents that escrow holders usually look for:

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 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. Title to the house is then given to you as new owner and correct title insurance is issued as noted in the escrow instructions.

When closing is in it's last step, you'll submit a payment to the escrow company. As your real estate agent, I'll let you know what is an acceptable way of paying.

The Escrow Holder Will:

Write escrow instructions
Perform a title search
Comply with the bank's requirements as written in the escrow agreement
Intake funds from the buyer
Prorate insurance, tax, interest and other payments according to guidelines
Record deeds and other paperwork as instructed
Request title insurance policy
Close escrow when all instructions of seller and buyer have been finished
Disburse monies and finalize instructions

The Escrow Holder Won't:

Advise you - the escrow holder stays a neutral, third-party status
Dispense opinions about the outcome of your taxes

The Escrow Holder Will:		The Escrow Holder Won't:
Prepare escrow instructions Request title search Comply with the bank's standards as written in the escrow agreement Receive payments from the buyer Prorate tax, interest, insurance and other fees according to instructions Record deeds and other paperwork as instructed Request title insurance policy Close escrow when all terms of agreement of seller and buyer have been met Disburse payments and finalize instructions		Give advice - the escrow company has to remain an impartial, third-party status Dispense opinions about future tax estimations

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

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

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