How Escrow Works
Escrow reduces the risk of fraud by acting as a trusted third-party that collects, holds and only disburses funds when both Buyers and Sellers are satisfied.
Escrow reduces the risk of fraud by acting as a trusted third-party that collects, holds and only disburses funds when both Buyers and Sellers are satisfied.
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HOW<br />
ESCROW<br />
WORKS
A HOUSE IS THE MOST EXPENSIVE<br />
PURCHASE MOST PEOPLE MAKE IN<br />
THEIR LIFETIME. SINCE THE PURCHASE<br />
IS SO LARGE, SECURING FUNDING FOR<br />
YOUR HOME MAY TAKE LONGER THAN<br />
THE ACTUAL SALE. THE COMPANY<br />
THAT MANAGES THE FUNDS FOR THE<br />
HOUSE UNTIL CLOSING IS CALLED THE<br />
"ESCROW COMPANY," "ESCROW<br />
AGENT," OR SIMPLY "ESCROW."
WHAT IS ESCROW?<br />
An escrow company or agent is an independent third party that handles aspects<br />
of the purchase and related loan transaction. The escrow company will often:<br />
Hold the down payment until the closing,<br />
Receive the amount of the loan from the lender,<br />
Transfer the down payment and mortgage money to the seller,<br />
Transfer and record the deed of title to the buyer or title company, and<br />
Make sure the lender is protected by filing and recording the mortgage with<br />
the local county recorder of deeds.<br />
WHO HANDLES ESCROW?<br />
In some states, the escrow functions are handled by a licensed title insurance<br />
company or an escrow company. <strong>How</strong>ever, in others, an attorney handles the<br />
transaction. In many states, escrow agents must be properly licensed in order to<br />
conduct business. In addition, the escrow agent must be someone who is not<br />
otherwise associated with the transaction. For example, the buyer's real estate<br />
agent or the seller's attorney cannot hold the escrow account. They may,<br />
however, recommend escrow agents that they have used before.
HOW DOES ESCROW FIT INTO THE HOME<br />
BUYING PROCESS?<br />
The home buyer and seller usually pick an escrow agent while negotiating the<br />
purchase agreement. They can also draft specific instructions to the escrow<br />
agent. The agent will then collect the buyer's earnest money deposit, along with<br />
copies of the purchase agreement and any other paperwork.<br />
The buyer will then work with a lender to finalize the mortgage. That can<br />
involve:<br />
A home inspection,<br />
A title report and title insurance,<br />
Acquiring homeowner's insurance,<br />
Comparing the final mortgage offer with the good faith estimate, and<br />
The final walkthrough.
HTTPS://ARTESIANTITLE.COM/<br />
HTTPS://REALESTATE.FIN<br />
DLAW.COM/BUYING-A-<br />
HOME/ESCROW.HTML<br />
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