The escrow company generally acts as a neutral intermediary between all the parties involved in a real estate or mortgage transaction.
These parts may include:
- insurance agents
A mortgage loan usually involves a large amount 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 this is a cash-out refinance, 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 deposits from the buyer, and deliver the remainder as proceeds of 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 record keeping.
How does the trust affect you?
Escrow fees are typically around $500-$1,500, depending on the size of the loan. The amount of the escrow fee may change depending on the amount of the loan or transaction.
Comparison of escrow services
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 many deals usually get a better price per deal from an escrow company, which, 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.