The escrow company usually serves as a neutral intermediary between all the parties involved in a real estate or mortgage transaction.
These parties can include:
- insurance agents
A mortgage loan usually involves a very large amount of paperwork. This is necessary to protect all the parties involved, including buyers, sellers, lenders, and others.
The escrow agent also handles the move of money between the parties. A lender will wire money into an escrow account. If it is a refinance to cash equity out the escrow agent will deduct the applicable fees owed to other parties and pay the remainder out to the borrower.
If the transaction is a real estate buy the escrow agent will receive money from the lender, pay off any existing mortgages and closing costs, collect any buyer depsosit, and give the rest as sales proceeds to the lender.
After any transaction the applicable public records are updated to mirror the ownership of a character and the liens on it.
It is a crtitical job that requires careful record keeping.
How The Escrow Affects You
Escrow fees are usually around $500 – $1500 depending on the loan size. The size of the escrow fee may change depending on the amount of the loan or transaction.
Shopping Around For Escrow sets
The escrow service is usually chosen by the realtors in the event of a real estate buy and the lender or mortgage broker in the event of a refinance.
Professionals who have done lots of deals usually get a better per deal price from an escrow company which may in turn pass on the savings to you.
You can ask how the escrow agent is chosen, and find out how their rates compare.