What is an “Escrow” ?
You’ll hear this term get thrown around constantly if you’re in the market for any type of real estate, but what does it mean? An escrow is defined as a mutual third party entity that handles the disbursement of funds and the fulfillment of the terms in a Real Estate Purchase Contract. Being a mutual third party, Escrow represents neither the buyer nor the seller in a transaction. Realtors will often refer to a newly accepted contract as “opening escrow”.
Why is it important?
Escrow’s job is to make sure all the terms in the purchase contract are met. Once those contingencies are met, they will then distribute the funds to the appropriate parties at closing: the seller receives the proceeds from the sale, and the buyer receives ownership of the home. That’s not all escrow does though! All Escrow companies have a Title department, this department is responsible for finding any pertinent information that could affect your new home. Title’s role is to examine tax records, pull the title report for the potential home, and to provide the legal description of the home a buyer plans to purchase.
What are the costs involved?
Escrow and Title costs will differ depending on the Escrow company that is chosen. The type of home being considered for purchase also plays a role in the closing costs. Closing costs generally range between 1%-2% of the final purchase price of a home. This figure will include the fees that Escrow charges along with any lender fees and is paid in addition to the down payment.
Have any other questions on the Escrow process or want to know how we can assist you with some of the fees associated with buying a home? Contact us now to learn more.