The process of buying a home involves many more people outside of the buyers, sellers and their real estate agents. When it is time to close on the property, you will be working with escrow and title companies. These services are essential in the home buying process. But, it is common for people who are unfamiliar with the real estate industry to need additional clarification about these services.
The Role of an Escrow Company
Escrow is a service that protects the interests of all parties involved in the transaction. When money and property are changing hands, there is a risk of issues that might arise. The escrow team is an independent service that manages the funds that come in and the way the paperwork, money, and property is distributed. Duties might include:
Working as a neutral agent to assist all parties involved
Requesting payoffs for various aspects of the transaction
Receiving the funds, securing the money, and releasing them at the appropriate times
Calculating prorations for taxes, interest, rent, and insurance
The Role of a Title Company
The title company plays several roles in the closing of a home. The team will complete tasks such as:
Completing a Title Search: This step is necessary to see if there are any equitable interests or legal rights on the property. Problems can arise if there are liens, unpaid taxes, lines of credit, or any other specific legal issues that need to be addressed before the closing. Your lender won’t issue the mortgage until the title search is complete.
Issue Title Insurance: Additionally, insurance can be provided for the title which covers potential hidden problems that might arise. These common issues include unknown land rights, forgotten wills, undisclosed heirs, and more.
Escrow Officer: There are times when the title company also serves as the escrow officer, ensuring that the funds, down payments, and closing costs are paid and then distributed properly.
The roles of both the title company and escrow services are designed to protect your investment. At the same time, it is important that you have a trusted real estate agent by your side if any questions arise before, during, or after the closing. Contact me any time if you need assistance when you are buying or selling a home.