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THE FUNCTIONS OF AN ESCROW

By asking the right questions, and knowing exactly what your needs are, you will be avoiding financial stress and find the right loan for you.  You can take certain approaches while mortgage shopping that can cost or save you money.

It is still true that the better qualifications you have, the lower your interest rate will be. However, there are mortgages available for almost everyone; it’s the interest rates or the down payments that vary.

Before you speak with a lender, know what monthly dollar amount you feel comfortable committing to. Then, when you discuss mortgage pre-approval with your lender, it is easier for you to determine the monthly amount and what value of home the monthly amount translates into. Do not put yourself in the position where you will be paying more each month than you intended simply because the dream home requires it.

Do your research on the types of mortgages available to you, and find the one that best suits your needs.  You will need to consider a number of things in terms of finding the best mortgage for each individual:

  • What type of market are you in? Are the interest rates falling or rising?
  • Do you want a fixed mortgage rate, where you will always know what your payment is going to be?
  • What are your long-term goals? Do you intend to resell the property? Do you only need the mortgage for a short time?

THE ESCROW HOLDER:

  • serves as the neutral “stakeholder” and the communications link to all parties in the transaction;
  • prepares escrow instructions;
  • requests a preliminary title search to determine the present condition of title to the property;
  • requests a beneficiary’s statement if debt or obligation is to be taken over by the buyer;
  • complies with lender’s requirements, specified in the escrow agreement;
  • receives purchase funds from the buyer;
  • prepares or secures the deed or other documents related to escrow;
  • prorates taxes, interest, insurance and rents according to instructions;
  • secures releases of all contingencies or other conditions as imposed on any particular escrow;
  • records deeds and any other documents as instructed;
  • requests issuance of the title insurance policy;
  • closes escrow when all the instructions of buyer and seller have been carried out;
  • disburses funds as authorized by instructions, including charges for title insurance, recording fees, real estate commissions and loan payoffs;
  • prepares final statements for the parties accounting for the disposition of all funds deposited in escrow (these are useful in the preparation of tax returns).

THE ESCROW HOLDER DOES NOT:

    • offer legal advice;
    • negotiate the transaction;
    • offer investment advice.

    Your local title company should be happy to provide additional information.

    Article by CLTA