Buying a home for the first time can be confusing. Let me help you. E-mail me at karl@multizonerealty.com .

Escrow 101

 Multi Zone Realty, Inc. can walk you through closing - (818)784-7002
First, a little about "escrow". When you're closing on your new house, an escrow holder is used to assure the process will close properly and in a timely manner. A place 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. An easy way to understand what an escrow company does is to think of the use of PayPal for Internet purchases.

The escrow holder insures that all terms and conditions of the seller's and buyer's negotiated agreement are performed prior to the sale being completed. This includes securing monies and documents, signing required forms, and getting the release documents for any loans or liens that are to be cleared with the transaction, assuring you have a free title to your house before the asking price is fully paid.

These are the legal documents that escrow companies usually compile:

  • 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. All expenses like title insurance, inspections and real estate commissions are paid. You'll then get the title to the property and the title insurance gets issued as stated in the escrow instructions.

When closing is completed, you'll make a payment to the escrow company. I'll keep you up-to-date on the next steps.

The Escrow Holder Will:

  • Write escrow guidelines
  • Perform a title inquiry
  • Meet lender's guidelines as specified in the escrow agreement
  • Receive payments from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • 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

The Escrow Holder Will Not:

  • Give advice - the escrow agent stays at an impartial, third-party status
  • Offer opinions about tax implications
The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow instructions
  • Perform a title inquiry
  • Comply with lender's requirements as outlined 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 are complete
  • Disburse funds and finalize instructions
  • Give advice - the escrow company stays at an impartial, third-party status
  • Dispense opinions about tax implications

Mortgage Escrow Account

Often, to pay recurring costs while there's a loan on the house, a Mortgage Escrow Account is created. 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 quick run-down of the escrow process. Your individual process will vary depending on your lender and your escrow company.

Looking to Buy?

Are you looking to buy a house? Let us help you. Just fill out as much of the information below that you want and we'll get right back to you, with no obligation to you. We guarantee your privacy.

Your Information
Some Details