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What is Escrow?

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Escrow: An escrow agent is used to assure your home closes on time and the process goes smoothly. A home is said to be in escrow when in the closing transaction, funds is held by a third party on behalf of a buyer and a seller when the transaction is taking place. PayPal is a good example of an escrow company.


The escrow agent makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being finalized. This includes receiving funds and certificates, finishing required forms, and seeking out the release documents for any loans or liens that were paid off with the transaction, assuring you have a clean title to your property before the asking price is fully paid.

Escrow agents want to acquire the following legal documents:

  • 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
  • Tax statements

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 paid out. Title to the home is then transferred to you as new homeowner and related title insurance is issued as noted in the escrow policy.

At the close of escrow, in an acceptable form to the escrow. We'll keep you informed on what comes next.

The Escrow Holder Will:
The Escrow Holder Won't:
  • Assemble escrow instructions
  • Perform a title research
  • Meet lender's standards as specified in the escrow agreement
  • Intake funds from the buyer
  • Prorate interest, insurance, tax and other payments according to instructions
  • Record deeds and other documents as instructed
  • Request title insurance policy
  • Close escrow when all terms of agreement of seller and buyer are met
  • Disburse payments and finish instructions
  • Tell you what's best - the escrow agent 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.

This is a easy to understand guide about the escrow process. Your individual methods may vary depending on your bank and your escrow company.

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