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Escrow 101

 Target Cost Realty, LLC can walk you through closing - (972) 504-8021
Let's talk about "escrow". An escrow holder is hired to assure your place closes on time and the money exchanging part of closing goes smoothly. A house is said to be in escrow when in the closing process, funds is secured by a third party on behalf of two parties when the exchange of money takes place. An everyday way to understand the concept of what an escrow company does is to compare it to PayPal for Internet purchases.

Clearing the final hurdles like obtaining funds, signing forms, getting the documents for loans and liens, and assuring you get a clear title to the house prior to your purchase gets finalized are all parts of closing in which an escrow holder is useful.

The documents the escrow holder may obtain include:

  • Tax statements
  • Fire and other insurance policies
  • 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

You're ready to close when every step is complete in escrow process. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. Title to the property is then transferred to you as new homeowner and related title insurance is issued as noted in the escrow policy.

When closing is done, you'll pay the fees to the escrow agent. As your REALTOR, I'll let you know what is an acceptable way of paying.

The Escrow Holder Will:

  • Assemble escrow instructions
  • Petition title research
  • Comply with lender's standards as outlined in the escrow agreement
  • Accept payments from the buyer
  • Prorate tax, interest, insurance and other fees according to instructions
  • Record deeds and other legal documents as instructed
  • Obtain title insurance policy
  • Close escrow when all instructions of seller and buyer are met
  • Disburse monies and finish instructions

The Escrow Holder Won't:

  • Give advice - the escrow agent must stay at a fair, third-party status
  • Offer opinions about the outcome of your taxes
The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Perform a title inquiry
  • Comply with the bank's guidelines as written in the escrow agreement
  • Intake payments from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other paperwork as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been met
  • Disburse funds and finish instructions
  • Give advice - the escrow agent stays a neutral, third-party status
  • Give insight about the outcome of your taxes

Mortgage Escrow Account

A Mortgage Escrow Account is started to pay rolling fees while there is a loan on the house. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

This is a quick run-down of the escrow process. Your specific process could be different based on your lender and your escrow holder.

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Target Cost Realty, LLC

2634 South Carrier Parkway Suite 107
Grand Prairie, Texas 75052