If you’re buying a home for the first time (or even the second or third time), then you may be a little confused about who does what exactly. For example – what does an escrow agent or escrow company do, and why do you need them? Let’s take a closer look at this important part of the closing process.
First of all, let’s take moment to clarify what an escrow agent (sometimes known as a title agent) actually is. When you’re dealing with a large financial transaction such as buying a house, the buyer and the seller will enlist the help of a third party to hold on to paperwork, money, and other assets until the process is finalized. This neutral third party is known as an escrow agent. Escrow agents help to keep these assets safe until all aspects of the agreement have been met. They have a fiduciary responsibility to both the buyer and the seller during the closing process.
Depending on your particular situation, either the real estate agent or the lender will open escrow. Once the sales agreement is executed, the buyer’s agent places the earnest money deposit in escrow. The escrow agent may require that you provide personal information at this time, such as your social security number and birthday. They will also request information about how you would like to hold title. This means providing the details about how you want your name listed on all the documents that will be prepared.
The escrow agent plays a vital role during any real estate transaction. Their duties include:
Escrow is created once the sales agreement is executed. Escrow cannot be closed until all the obligations of the agreement have been met and all documents have been signed. While there is no set number of days for the escrow process, the average length is approximately 45 days. Less complicated transactions can take a shorter amount of time. On the other hand, transactions that are more complicated can take several months to close.
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