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

Whether it's your first house or your next home, I'll educate you through the process. Contact me and I'll help you become a well-informed buyer.

What is Escrow?

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 holder) is brought into the picture to assure the process will close correctly and on time. Escrow holders hold money for "safe-keeping" in transactions between a buyer and seller. An everyday way to understand what an escrow company does is to compare it to PayPal for Internet purchases.

The escrow agent insures that all terms and conditions of the seller's and buyer's contract are met prior to the sale being finished. This includes getting monies and records, completing required forms, and getting the release documents for any loans or liens that have been paid off with the transaction, assuring you have a free title to your house before the purchase price is fully paid.

Escrow companies look for the following pieces of paperwork:

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

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 taken. The house's title gets transferred to you and title insurance begins per the policies of your particular escrow process.

When closing is done, you'll pay the fees to the escrow company. As your real estate agent, I'll inform you of the acceptable form of payment.

The Escrow Holder Will:

Assemble escrow guidelines
Perform a title inquiry
Meet lender's standards as written 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 finished
Disburse monies and finalize instructions

The Escrow Holder Will Not:

Offer advice - the escrow holder stays at an impartial, third-party status
Dispense opinions about the outcome of your taxes

The Escrow Holder Will:		The Escrow Holder Won't:
Prepare escrow guidelines Request title research Meet the bank's requirements as outlined in the escrow agreement Receive funds from the buyer Prorate interest, insurance, tax and other payments according to guidelines Record deeds and other paperwork as instructed Request title insurance policy Close escrow when all instructions of seller and buyer are met Disburse funds and finalize instructions		Tell you what's best - the escrow agent must stay at a fair, third-party status Offer 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. Though most home buyers make payments via their monthly mortgage payment, Escrow Accounts are deposited into at closing as well.

Now you know more about how to close on your future home. And, you can be a more confident home buyer and future homeowner.

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