Whether you are buying a house or selling one, the world of unfamiliar terminology can be both confusing and overwhelming. For many, escrow is one of the trickiest concepts to understand. While most people have a general idea about what escrow means, few completely understand why this critically important process can make or break their home buying experience.

WHAT IS ESCROW?

Escrow refers to a third-party service that is part of every home purchase. When a buyer and seller initially arrive at a purchase agreement, they select a neutral third party to act as the escrow agent. The escrow agent collects a deposit from the buyer that is equal to a small percentage of the sale price. This deposit is known as “earnest money”. In exchange, the seller takes the property listing off the market. Until the final exchange is completed, both the seller’s property and the buyer’s deposit are said to be in escrow.

HOW DOES AN ESCROW ACCOUNT WORK?

Escrow accounts are a part of the mortgage process homebuyers typically cannot avoid. With mortgages, home buyers typically pay a little extra into an escrow account every month, along with their home loan payments.

While a mortgage holder (most typically a bank) collects the principal and interest payments each month, they also can collect homeownerís insurance payments and property taxes. They will then pay those bills when they come due. They do this because when you borrow money from a lender to finance your home purchase, the property becomes the collateral for your loan. Your lender needs to know that the property is adequately insured so that it can be repaired or replaced if damaged. Likewise, they want to prevent a tax lien being placed on the property if you neglect to pay taxes.

YOUR ROLE AS A HOME SELLER

Some examples of the seller’s legal responsibilities during escrow might include:

  • Obtaining a title insurance policy
  • Paying escrow service fees
  • Paying for drawing the deed and for drawing/recording the re-conveyance deed(s)
  • Paying notary fees
  • Paying county (or possible city) transfer taxes
  • Paying any other charges that may have been agreed upon in the contract

YOUR ROLE AS A HOME BUYER

Some of the buyer’s legal responsibilities during escrow may include:

  • Obtaining a standard or owner’s policy of title insurance (varies from area to area)
  • Paying escrow fees
  • Paying fees for drawing a first or second deed
  • Paying notary fees
  • Paying fees for recording the deed
  • Paying any other charges that may have been agreed upon in the contract

WHY CHOOSE CITRUS HERITAGE ESCROW?

When choosing an escrow company there can be many important factors to evaluate. Fees, location, staff and even recommendations from friends and colleagues are all things to consider. With Citrus Heritage Escrow by your side, you can rest assured that when you receive your settlement check, youíve gained the maximum benefit from your home sale or purchase.

Call us today with any questions or concerns. Our professional Escrow Agents will help you through this exciting yet confusing process. (951) 335-7200

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