Escrow. It is a term we hear often, but what exactly is escrow? According to the Merriam-Webster Dictionary, escrow is defined as a deed, a bond, money, or a piece of property held in trust by a third party to be turned over to the grantee only upon fulfillment of a condition. In the real estate world, this simply means a list of specific instructions that must be done by both seller and buyer before the property’s deed can be handed over. One of the most important aspects of this list is the securing of a loan.
So what happens after the loan has been approved and the documents have been prepared?
If provided in your Purchase Agreement, you should do a final walk through with your agent to ensure that all repairs have been made and the property is exactly as it was promised to you. You will then make an appointment to go to a Title Company to sign the loan documents and escrow instructions in the presence of a notary. The lender will then review the documents one last time before sending the loan to escrow.
When all parties have signed off on the escrow stating that the terms and conditions of the escrow have been met, the escrow officer will set a date for the closing of the escrow and will take care of all of the technical and financial details.
At the close of escrow, you will be required to present proof of homeowner’s insurance. The seller will be required to show proof of warranties, inspection, appraisal, ect. The escrow officer will then list for both parties the amount owed on either side for prepaid taxes, unpaid taxes, down payments, refunds, ect. When all the documentation has been verified and agreed upon and you have signed the mortgage note—the promise to repay the loan—you will receive the deed.