The essential
The escrow company generally acts as a neutral intermediary between all parties involved in a real estate or mortgage transaction.
These parts may include:
- lenders
- runners
- insurance agents
- appraisers
- notaries
A home loan usually involves a lot of paperwork. This is necessary to protect all parties involved, including buyers, sellers, lenders, and others.
The escrow agent also handles the transfer of money between the parties. A lender will transfer money to an escrow account. If it is a refinancing to cash out principal, the escrow agent will deduct any applicable fees owed to other parties and pay the remainder to the borrower.
If the transaction is a real estate purchase, the escrow agent will receive money from the lender, pay existing mortgages and closing costs, collect any deposit from the buyer, and deliver the remainder as proceeds of the sale to the lender.
After any transaction, the relevant public records are updated to reflect the ownership of a property and the liens on it.
It is a critical job that requires meticulous recording.
How the trust affects you
Escrow fees are typically around $500 – $1500 depending on the size of the loan. The amount of the escrow fee may change based on the amount of the loan or transaction.
Escrow Services Comparison
The escrow service is typically chosen by real estate agents in the case of a real estate purchase and by the lender or mortgage broker in the case of a refinance.
Professionals who have done a lot of deals generally get a better price per deal from an escrow company who, in turn, can pass the savings on to you.
You can ask how the escrow agent is selected and find out how their rates compare.