Understanding how Escrow works – Hanley Agency, Inc., Pittsburgh, PA

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Escrow 101

Hanley Agency, Inc. can walk you through closing - 412-422-7900

First, a little about "escrow". To close the sale of a home, a neutral, third party (the escrow agent) is brought into the picture to assure the process will close appropriately and on time. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an Internet purchase, PayPal is the reliable third party that holds the buyer's funds, and then hands over the funds to the seller.

The escrow agent makes sure that the terms and conditions of the agreement between the seller and buyer are reached prior to the sale being finished.

These are the documents that escrow holders usually look for:

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

Upon finishing of all instructions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. The house's title gets handed over to you and title insurance is issued per the steps of your individual escrow agreement.

At the close of escrow, payments are submitted in an acceptable form to the escrow. As your REALTOR, I'll inform you of the acceptable form of payment.

The Escrow Holder Will:

Assemble escrow guidelines
Request title search
Comply with the bank's requirements as specified in the escrow agreement
Intake funds from the buyer
Prorate insurance, tax, interest and other payments according to instructions
Record deeds and other documents as instructed
Request title insurance policy
Close escrow when all instructions of seller and buyer are met
Disburse funds and finish instructions

The Escrow Holder Will Not:

Give advice - the escrow holder has to remain an impartial, third-party status
Dispense opinions about the outcome of your taxes

The Escrow Holder Will:		The Escrow Holder Won't:
Write escrow instructions Petition title inquiry Meet lender's standards as written in the escrow agreement Accept funds from the buyer Prorate tax, interest, insurance and other fees according to instructions Record deeds and other documents as instructed Obtain title insurance policy Close escrow when all terms of agreement of seller and buyer have been met Disburse payments and finalize instructions		Advise you - the escrow holder stays at an impartial, third-party status Give insight about tax implications

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Usually, the home buyer makes a payment at closing and also makes regular deposits through their monthly mortgage payment to fund the Escrow Account.

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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