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| 1. |
What is a mortgage broker/lender? Answer |
| 2. |
Why should I use a mortgage broker instead of going directly to my bank? Answer |
| 3. |
What are some of the terms used by Attorneys and Title Agents? Answer |
| 4. |
What are some of the terms used by Realtors and in a Real Estate Contract? Answer |
| 5. |
What is Title Insurance and Escrow/Closing? Answer |
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What is a mortgage broker/lender? |
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A mortgage broker/lender is someone that can assist you in the complex transaction to obtain financing to purchase a home. |
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Why should I use a mortgage broker instead of going directly to my bank? |
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The answer to this question is very simple. A licensed mortgage company, such as America's Mortgage Choice can help you obtain competitive interest rates and offer a wide range of programs that are available in the market. In addition, they can help you move simply and easily through the complex transactions needed for qualifying. If you deal directly with the bank, you are LIMITED to the programs, rates and terms they offer. Simply put America's Mortgage Choice takes the hassle out of obtaining a mortgage loan without additional fees. We work for you in the transaction. |
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What are some of the terms used by Attorneys and Title Agents? |
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Abstract (Of Title)
A summary of the public records relating to the title to a particular piece of land. An attorney or title insurance company reviews an abstract of title to determine whether there are any title defects which must be cleared before a buyer can purchase clear, marketable, and insurable title.
Acceleration Clause
Condition in a mortgage that may require the balance of the loan to become due immediately, if regular mortgage payments are not made or for breach of other conditions of the mortgage.
Adjustable-Rate Mortgage (ARM)
A loan with an interest rate that changes periodically in keeping with a current index, like one-year treasury bills. Typically, however, ARM’s can’t jump more than two percentage points per year or six points above the starting rate.
Agreement of Sale
Known by various names, such as contract of purchase, purchase agreement, or sales agreement according to location or jurisdiction. A contract in which a seller agrees to sell and a buyer agrees to buy, under certain specific terms and conditions spelled out in writing and signed by both parties.
Amortization
A payment plan which enables the borrower to reduce his debt gradually through monthly payments of principal.
Appraisal
An expert judgment or estimate of the quality or value of real estate as of a given date.
B
Binder
An early agreement to buy a home from a seller, which is usually ensured with earnest money.
Broker
(See real estate broker)
C
Closing Costs
The numerous expenses which buyers and sellers normally incur to complete a transaction in the transfer of ownership of real estate. These costs are in addition to price of the property and are items prepaid at the closing day. This is a typical list:
BUYER'S EXPENSES SELLER'S EXPENSES
Documentary Stamps on Notes
Cost of Abstract
Recording Deed and Mortgage
Documentary Stamps on Deed
Escrow Fees
Real Estate Commission
Attorney's Fee
Recording Mortgage
Title Insurance
Survey Charge
Appraisal and Inspection
Escrow Fees
Survey Charge
Attorney's Fee
The agreement of sale negotiated previously between the buyer and the seller may state in writing who will pay each of the above costs.
Closing Day
The day on which the formalities of a real estate sale are concluded. The certificate of title, abstract, and deed are generally prepared for the closing by an attorney and this cost charged to the buyer. The buyer signs the mortgage, and closing costs are paid. The final closing merely confirms the original agreement reached in the agreement of sale.
Cloud (On Title)
An outstanding claim or encumbrance which adversely affects the marketability of title.
Commitment Letter
A written promise from a lender that you will receive a mortgage of a specified amount at a specified rate.
Conditional Offer
An offer to buy a property, but only under certain circumstances (for example, the buyer receives financing or sells her old home first).
Contractor
In the construction industry, a contractor is one who contracts to erect buildings or portions of them. There are also contractors for each phase of construction: heating, electrical, plumbing, air conditioning, road building, bridge and dam erection, and others.
Conventional Mortgage
A mortgage loan not insured by HUD or guaranteed by the Veterans' Administration. It is subject to conditions established by the lending institution and State statutes. The mortgage rates may vary with different institutions and between States. (States have various interest limits.)
D
Deed
A formal written instrument by which title to real property is transferred from one owner to another. The deed should contain an accurate description of the property being conveyed, should be signed and witnessed according to the laws of the State where the property is located, and should be delivered to the purchaser at closing day. There are two parties to a deed: the grantor and the grantee. (See also deed of trust, general warranty deed, quitclaim deed, and special warranty deed.)
Deed of Trust
Like a mortgage, a security instrument whereby real property is given as security for a debt. However, in a deed of trust there are three parties to the instrument: the borrower, the trustee, and the lender, (or beneficiary). In such a transaction, the borrower transfers the legal title for the property to the trustee who holds the property in trust as security for the payment of the debt to the lender or beneficiary. If the borrower pays the debt as agreed, the deed of trust becomes void. If, however, he defaults in the payment of the debt, the trustee may sell the property at a public sale, under the terms of the deed of trust. In most jurisdictions where the deed of trust is in force, the borrower is subject to having his property sold without benefit of legal proceedings. A few States have begun in recent years to treat the deed of trust like a mortgage.
Documentary Stamps
A State tax, in the forms of stamps, required on deeds and mortgages when real estate title passes from one owner to another. The amount of stamps required varies with each State.
E
Earnest Money
The deposit money given to the seller or his agent by the potential buyer upon the signing of the agreement of sale to show that he is serious about buying the house. If the sale goes through, the earnest money is applied against the down payment. If the sale does not go through, the earnest money will be forfeited or lost unless the binder or offer to purchase expressly provides that it is refundable.
Easement Rights
A right-of-way granted to a person or company authorizing access to or over the owner's land. An electric company obtaining a right-of-way across private property is a common example.
Encroachment
An obstruction, building, or part of a building that intrudes beyond a legal boundary onto neighboring private or public land, or a building extending beyond the building line.
Encumbrance
A legal right or interest in land that affects a good or clear title, and diminishes the land's value. It can take numerous forms, such as zoning ordinances, easement rights, claims, mortgages, liens, charges, a pending legal action, unpaid taxes, or restrictive convenants. An encumbrance does not legally prevent transfer of the property to another. A title search is all that is usually done to reveal the existence of such encumbrances, and it is up to the buyer to determine whether he wants to purchase with the encumbrance, or what can be done to remove it.
Equity
The portion of a property you own outright. If, for example, you put 20 percent down on a house, you have 20 percent equity in your property. Over time, you earn more equity as you pay off the mortgage.
Escrow
Funds paid by one party to another (the escrow agent) to hold until the occurrence of a specified event, after which the funds are released to a designated individual. In FHA mortgage transactions an escrow account usually refers to the funds a mortgagor pays the lender at the time of the periodic mortgage payments. The money is held in a trust fund, provided by the lender for the buyer. Such funds should be adequate to cover yearly anticipated expenditures for mortgage insurance premiums, taxes, hazard insurance premiums, and special assessments.
Escrow money
Escrow money is held by a third party until the deal is sealed. Earnest money, for example, may be held in escrow until closing day.
F
Fixed-Rate Mortgage
A loan that carries an unchangeable interest rate over its entire term - typically a period of 15-30 years.
G
General Warranty Deed
A deed which conveys not only all the grantor's interests in and title to the property to the grantee, but also warrants that if the title is defective or has a "cloud" on it (such as mortgage claims, tax liens, title claims, judgments, or mechanic's liens against it) the grantee may hold the grantor liable.
Grantee
That party in the deed who is the buyer or recipient.
Grantor
That party in the deed who is the seller or giver.
H
Hazard Insurance
Protects against damages caused to property by fire, windstorms, and other common hazards.
HUD
U.S. Department of Housing and Urban Development. Office of Housing/Federal Housing Administration within HUD insures home mortgage loans made by lenders and sets minimum standards for such homes.
I
Interest
A charge paid for borrowing money. (See mortgage note)
L
Lien
A claim by one person on the property of another as security for money owed. Such claims may include obligations not met or satisfied, judgments, unpaid taxes, materials, or labor. (See also special lien.)
Lock-In
A guarantee - for which you are usually charged a fee - that you will receive a specific rate when you close your mortgage.
M
Market Value
The price that a home will likely fetch on the market, based on comparisons to similar homes that have sold recently.
Marketable Title
A title that is free and clear of objectionable liens, clouds, or other title defects. A title which enables an owner to sell his property freely to others and which others will accept without objection.
Mortgage
A lien or claim against real property given by the buyer to the lender as security for money borrowed. Under government-insured or loan-guarantee provisions, the payments may include escrow amounts covering taxes, hazard insurance, water charges, and special assessments. Mortgages generally run from 10 to 30 years, during which the loan is to be paid off.
Mortgage Commitment
A written notice from the bank or other lending institution saying it will advance mortgage funds in a specified amount to enable a buyer to purchase a house.
Mortgage Insurance Premium
The payment made by a borrower to the lender for transmittal to HUD to help defray the cost of the FHA mortgage insurance program and to provide a reserve fund to protect lenders against loss in insured mortgage transactions. In FHA insured mortgages this represents an annual rate of one-half of one percent paid by the mortgagor on a monthly basis.
Mortgage Note
A written agreement to repay a loan. The agreement is secured by a mortgage, serves as proof of an indebtedness, and states the manner in which it shall be paid. The note states the actual amount of the debt that the mortgage secures and renders the mortgagor personally responsible for repayment.
Mortgage (Open-End)
A mortgage with a provision that permits borrowing additional money in the future without refinancing the loan or paying additional financing charges. Open-end provisions often limit such borrowing to no more than would raise the balance to the original loan figure.
Mortgagee
The lender in a mortgage agreement.
Mortgagor
The borrower in a mortgage agreement.
P
PITI
Abbreviation for principal, interest, taxes and insurance, all of which are lumped together in your monthly mortgage payment.
Plat
A map or chart of a lot, subdivision or community drawn by a surveyor showing boundary lines, buildings, improvements on the land, and easements.
Points
A one-time-only fee you pay up front to your lender, sometimes in exchange for a slightly lower mortgage rate. One point equals one percent of the total amount you plan to borrow.
Prepayment
Payment of mortgage loan, or part of it, before due date. Mortgage agreements often restrict the right of prepayment either by limiting the amount that can be prepaid in any one year or charging a penalty for prepayment. The Federal Housing Administration does not permit such restrictions in FHA insured mortgages.
Principal
The basic element of the loan as distinguished from interest and mortgage insurance premium. In other words, principal is the amount upon which interest is paid.
Q
Quitclaim Deed
A deed which transfers whatever interest the maker of the deed may have in the particular parcel of land. A quitclaim deed is often given to clear the title when the grantor's interest in a property is questionable. By accepting such a deed the buyer assumes all the risks. Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has. (See deed.)
R
Real Estate Broker/Agent
A representative who lists and or finds a buyer for the property on a commission basis. The broker does not have title to the property, but generally represents the owner.
Refinancing
The process of the same mortgagor paying off one loan with the proceeds from another loan.
S
Special Assessments
A special tax imposed on property, individual lots or all property in the immediate area, for road construction, sidewalks, sewers, street lights, etc.
Survey
A map or plat made by a licensed surveyor showing the results of measuring the land with its elevations, improvements, boundaries, and its relationship to surrounding tracts of land. A survey is often required by the lender to assure him that a building is actually sited on the land according to its legal description.
T
Tax
As applied to real estate, an enforced charge imposed on persons, property or income, to be used to support the State. The governing body in turn utilizes the funds in the best interest of the general public.
Title
As generally used, the rights of ownership and possession of particular property. In real estate usage, title may refer to the instruments or documents by which a right of ownership is established (title documents), or it may refer to the ownership interest one has in the real estate.
Title Insurance
Protects lenders or homeowners against loss of their interest in property due to legal defects in title. Title insurance may be issued to a "mortgagee's title policy." Insurance benefits will be paid only to the "named insured" in the title policy, so it is important that an owner purchase an "owner's title policy", if he desires the protection of title insurance.
Title Search or Examination
A check of the title records, generally at the local courthouse, to make sure the buyer is purchasing a house from the legal owner and there are no liens, overdue special assessments, or other claims or outstanding restrictive convenants filed in the record, which would adversely affect the marketability or value of title.
Trustee
A party who is given legal responsibility to hold property in the best interest of or "for the benefit of" another. The trustee is one placed in a position of responsibility for another, a responsibility enforceable in a court of law. (See deed of trust.)
Terms provided by the U.S. Department of Housing and Urban Development.
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What are some of the terms used by Realtors and in a Real Estate Contract? |
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Adjustable Rate Mortgage: or ARM - is a mortgage that has an initial rate which adjusts periodically. The initial rate adjusts based upon the movement of an underlying index. There are number of different indexes (i.e.; LIBOR or London Interbank Offer Rate, 11th District cost of funds, T-Bill, etc.). On ARMs, a predetermined margin is added to the index to compute the interest rate.
Administration Fee: - a Title West Mortgage, Inc. Funding fee that includes the following: Processing fee, underwriting fee, and document preparation fee. Amortization: - gradual reduction of a mortgage debt through periodic payments according to a schedule over a specified mortgage term.
Appraisal: - a report that sets forth an estimate or opinion of fair market value: also refers to the process by which a value estimate is obtained.
Arms-Length Transaction: - is a transaction negotiated by unrelated parties, each acting in his/her own best interest.
B
Back-End Ratio: - total debt-to-income ratio. Total monthly obligations divided by gross monthly income. Monthly obligations include: mortgage payment, property taxes, insurance premiums, installment loans, and revolving debt.
Balloon Mortgage: - a mortgage that has level monthly payments over a stated term but which provides for a lump-sum payment to be due at the end of an earlier specified time (i.e.; 5 & 7 year balloon mortgages, where the payment is fixed for 5 or 7 years then becomes due and payable at the end of the term).
Bankruptcy: - a proceeding in a federal court in which a debtor (one who owes more than his/her assets) is relieved from the payment of debts.
Buy Down: - an arrangement where a party pays a lender an up-front fee, or premium, to "buy down" the interest rate on a loan for a temporary time period, usually one to three years: usually expressed as two numbers. For example, 2/1 where the two represents a 2% rate buy down the first year and the one represents 1% buy down the second year, the third year the rate would revert to the "straight" note rate.
C
Cash-Out Refinance: - a transaction that provides cash proceeds to the borrower in excess of 1% of the mortgage amount or provides cash that is used to pay-off consumer debt.
Cash Reserves: - the amount of liquid assets the borrower has remaining after the mortgage loan transaction is completed.
Closing Costs: - money paid by borrowers and sellers to effect the closing of a loan: could include origination fees, discount fees, title insurance, survey fees, attorney's fees, appraisal fees, credit report fees, and prepaid items such as taxes and insurance.
Combined Loan-to-Value (CLTV): - the ratio of the total mortgage liens against the subject property to the lesser of either the appraised value or the sales price.
Compensating Factors: - borrower strengths that mitigate or compensate for a borrower's weakness (i.e.; length of employment, considerable cash reserves, etc.).
Conforming Loans: - loans that do not exceed the maximum loan amount and LTV limitations established by FNMA or FHLMC.
Co-borrower: - is a person who is jointly and equally liable for repayment of the mortgage obligation. A co-borrower completes an application and submits all documentation and may not be on the security instrument.
Construction Perm: - construction-to-permanent financing involves the granting of a long term mortgage for the purpose of replacing interim construction financing that the borrower obtained to fund the construction of a new residence. The transaction may be considered as a purchase or a refinance.
Convertible ARM: - a type of ARM that includes an option for the mortgagor to change the mortgage to a fixed rate mortgage at specified intervals during a predetermined time.
Cost of Funds Index: or COFI - is an index that is used to determine interest rate changes for certain ARMs. It represents the weighted average cost of savings, borrowing's, and advances of the 11th District members of the Federal Home Loan Bank of San Francisco.
Credit Bureau Repository: - an organization that compiles credit history data directly from lenders and creditors to build in-file credit reports for individuals: the main repositories are TRW, TransUnion, & Equifax.
D
Debt-to-Income Ratio: - is the ratio of the borrowers total monthly obligations, including housing expenses and recurring debts to monthly income. It is used to determine the borrower's capacity to repay the mortgage and all other debts.
Deed of Trust: - in certain states, a legal instrument that secures a note and perfects a security interest upon real property.
Discount Points: - are payable to the lender by the borrower or seller to decrease the interest rate. One point is equal to 1% of the loan amount.
Drive-by Appraisal: - is an estimate of value given that is based mainly on recent comparable sales.
E
Escrow Account: - is held by the lender on behalf of the borrower for the payment of taxes, insurance or special assessments: also called an impound account.
F
Federal Housing Administration (FHA): - is a government mortgage insurance agency under direction of the Department of Housing and Urban Development (HUD) that insures lenders against loss from default of borrowers on residential properties.
Federal National Mortgage Association (FNMA) AKA Fannie Mae:- is a tax-paying corporation, created by Congress to support the secondary mortgage market.
Federal Home Loan Mortgage Corporation (FHLMC) AKA FreddieMac: - is a tax-paying corporation, created by Congress that purchases conventional mortgages in the secondary mortgage market.
Fixed Rate Mortgage: - a mortgage with one set interest rate for the entire term of the mortgage.
Foreclosure: - the legal process by which a borrower is in default under a mortgage or deed of trust, loses his/her interest in the mortgaged property: this process usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
G
Gift Funds: - funds donated on behalf of the borrower from certain eligible sources to assist the borrower in meeting closing costs. Generally eligible sources are: relatives, church, municipality, or a nonprofit organization.
H
Hazard Insurance: - insurance coverage that compensates for physical damage by fire, wind or other natural disasters to the property.
HOA: or homeowners association - is a nonprofit association, whose directors and officers are elected by the unit owners of a condominium or PUD project; primary responsibilities are to manage the common areas, expenses and services of the project.
Home Equity Line of Credit: or HELOC - is a real estate loan, usually in a subordinate position, usually in a subordinate position, that allows a borrower to withdraw equity in real estate owned with specific limitations.
Housing Debt-to-Income Ratio: - the sum of all monthly housing mortgage expenses such as PITI, homeowners dues, private mortgage insurance and any special assessments as a percentage of gross qualifying income.
I
Impound Account: - see "Escrow Account"
Index: - a published interest rate, such as the prime rate, LIBOR, T-Bill rate or the 11th District COF. Lenders use indexes to establish interest rates charged on mortgages or to compare investment returns. A predetermined margin is added to the index to compute the interest rate on the ARM.
Installment Debt: - borrowed money that is repaid in successive payments, usually at regular intervals; the monthly debt service can be excluded for D/I purposes if 10 or fewer payments remain to be made.
Investment Property: - a non-owner occupied residential property used for the generation of income.
J
Junior Lien: - any lien that is subordinate or subsequent to the claims of a prior lien.
M
Margin: - the amount that is added to the index to create the mortgage interest rate for an ARM.
Mortgage: - a note or other evidence of real property being pledged as the security for a debt; also referred to as a "Deed of Trust", "Trust Deed", or "Security Instrument"
Mortgage Insurance: or MI - is insurance that protects a mortgage lender against loss in the event of default by the borrower. This insurance allows lenders to make loans with lower down payments (LTVs above 80%, in most cases).
N
Negative Amortization: - a gradual increase in the mortgage debt caused by unpaid interest that is added to the mortgage principal because the payment is not sufficient to cover the full amount of interest due.
Non-Conforming Loans: - those loans that exceed the conforming loan limits. Generally, loans above $214,600 (Jumbo).
O
Origination Fee: - a fee charged to the borrower to reduce the interest rate; this fee is usually stated as a percentage; see "Discount Points"
P
Prepaid Items: - items that generally must be paid for at the time of closing and are generally recurring charges. Prepaid items may include the following:
First year premiums for hazard, flood and mortgage insurance.
Prorated interest.
Any special assessments which must be prepaid (i.e.; water/sewer connection, etc.).
Escrow account for any of the above.
Private Mortgage Insurance: or PMI - insurance coverage that lenders require the borrower to obtain to protect the lender against loss in the event of a mortgage default for higher LTV mortgages.
PUD: or Planned Unit Development - is a real estate project in which each unit owner has title to a residential lot and a non-exclusive easement on the common areas of the project.
Purchase Money Mortgage: - a mortgage used to purchase real property where title is conveyed from one individual to another.
Q
Qualifying Ratios: - the percentage of payment to income (P/I) and debt-to-income (D/I) that is used to measure the borrower's capacity to repay the mortgage debt.
R
Rate & Term Refinance: - a refinance of any mortgage in which the new mortgage amount is limited to the unpaid principal balance of the existing first mortgage plus any closing costs.
Revolving Debt: - a debt that does not have a fixed payment, although repayment is usually a percentage of the outstanding balance and made at regular intervals; most common are credit cards issued by banks and department stores.
S
Second Mortgage: - a mortgage that is in a second position behind the first mortgage; see "Junior Lien."
Self Employed Borrower: - a borrower whose income is derived from a business source in which he/she has an ownership interest of 25% or more.
Servicing: - the administration of a loan that includes, but is not limited to, the collection of the monthly payments, and/or related fees, and disbursement of the collections to the investor who owns the loan. Upon selling the loan, servicing may either be retained or released. If retained, the selling lender will be paid a fee for managing the loan account. If servicing is released, the seller is not responsible for the loan administration.
Settlement Costs: - see "Closing Costs."
Single Family Residence: or SFR - is a structure that is intended to house one family.
Subordinate Financing: - secondary financing secured by a lien that is junior to the first mortgage or senior claim.
Supplemental Income: - income derived from sources such as interest/dividends, capital gains, and rental properties; these incomes require tax returns to support the qualifying income.
Sweat Equity: - the exchange of labor or services in lieu of paying cash for the purpose of receiving credit towards the down payment: this generally is not an eligible source of down payment.
T
Tax Service Contract: - the lender's verification of payment of property taxes.
Temporary Buy down: - a loan on which the interest rate has been "bought down" for a temporary period of time at the beginning of the loan by escrowing funds at the time of closing, which will be applied to the total monthly mortgage payment as each becomes due. See "Buy Down."
Timeshare: - a real estate development in which a buyer can purchase the exclusive right to occupy a unit for a specified period of time each year, not eligible for financing with Title West Mortgage, Inc. Funding.
Title Insurance: - a type of insurance that insures against defects in title that were not listed in title work or abstract.
Townhouse: - an architectural type of construction; a row house on a small lot that has exterior limits common to other similar units; title to the unit and it's lot is vested in the individual owner with a fractional interest in common areas.
Two-step ARM: - an ARM that has a fixed interest rate for the first five or seven years of the mortgage term, then adjusts at the current market rate plus a predetermined margin, then remaining fixed at that rate for the remainder of the term.
Two-to-Four Family Properties: - consists of a structure that provides dwelling units for two, three or four families, although ownership is evidenced by a single deed.
U
Underwriter: - an analyst who reviews the supportive documentation to determine the risk associated with the loan request. The person who gives final loan approval.
V
Veterans Administration: or VA - is a government agency designed to encourage mortgage lenders to offer long term, low down payment financing to eligible veterans by partially guaranteeing the lender against loss from default.
Z
Zoning: - the creation of districts by local governments in which specific types of property uses are authorized (e.g., commercial, industrial, residential, high density, mixed use).
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What is Title Insurance and Escrow/Closing? |
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WHAT IS TITLE INSURANCE? WHAT IS ESCROW/CLOSING?
What is Title Insurance?
Fire insurance protects you against losses from fire. Collision insurance guards you against the cost of a damaged car. Theft insurance-well, you get the idea.
Title insurance protects the title to real estate that you are about to acquire. To understand why title protection is essential, we need to consider real estate for a moment. Your Ownership of Real Estate
Real estate has always been considered man's most valuable possession. It is so basic a form of wealth that many special laws have been enacted to protect ownership of land and the buildings which stand on it. You should realize whenever you buy property that the owner who is selling it to you has extremely strong rights, as does his/her family and heirs. There may be others-in addition to the owner-who have "rights" in the property you are going to buy. Governmental bodies or contractors, for example. Some of the things that a title search uncovers are any unpaid taxes or mortgages, judgments against previous owners, easements, and other court actions or recorded documents which can affect title to real estate. We find and report such defects in the title to the real estate you wish to buy, so that these matters can be corrected. This is the first benefit you receive when title insurance is ordered.
How Does a Title Insurance Policy Protect Against These Damages?
If a claim is made against your title as covered by your policy, your Title Insurance protects you by:
Defending your title, in court if necessary, at our expense; or
Bearing the cost of settling the claim,if it proves valid, in order to perfect your title and keep you in possession of the property; or Paying you for a covered loss.
Title insurance insures against loss or damage by reason of covered matters, which have not been excluded or excepted from coverage. And-
It is insurance that, if any unexpected claim covered by your policy arises out of the past to threaten your ownership of real estate, it will be disposed of, or you will be reimbursed, exactly as your title insurance policy provides. Likewise, the original premium is your only cost as long as you own the property! There are no annual payments to keep your Owners Title Insurance Policy in force.
What Is Escrow/Closing?
An escrow is created when money and/or documents are deposited, by two or more persons, with a third party which are to be delivered upon the happening of certain conditions. The third party is known as the escrow agent or escrow holder.
The authority given to an escrow holder is strictly limited by instructions provided by the parties involved. Consequently, an escrow holder acts on mutual instructions deposited into escrow and DOES NOT represent any party. The escrow officer is authorized by instructions to allocate funds for items during the escrow period, such as real estate commissions, title insurance, liens, recording fees and other closing costs. Instructions also specify the method of collecting funds, proration issues, time limitations and the term of the transaction. The escrow process protects all parties involved by retaining money and documents until the mutual instructions are met. |
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