Escrow 101

 Northern Land & Realty Co. can walk you through closing - (406) 265-2253

An escrow company is hired to assure your house closes on time and the closing process goes smoothly. A home is said to be in escrow when in the closing process, funds is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. For example, in an online transaction, PayPal is the neutral third party that obtains the buyer's payment, and then hands over the funds to the seller.

Settling the last details like taking in funds, completing forms, securing the documents for loans and liens, and making sure you a clear title to the house before your purchase gets finalized are all part of the job of the escrow holder.

Whether it's your first place or your next property, we'll advise you through the process. Contact us.

Escrow companies collect the following documents:

  • Title insurance policies
  • Terms of sale and any seller-assisted financing
  • Requests for payment for various services to be paid out of escrow funds
  • Loan documents
  • Tax statements
  • Fire and other insurance policies

Closing on the house takes place when the steps of the escrow are complete. All expenses like title insurance, inspections and real estate commissions are paid. Title to the home is then given to you as now current homeowner and correct title insurance is issued as noted in the escrow instructions.

When closing is in it's last step, you'll make a payment to the escrow agent. As your real estate agent, I'll let you know what is an acceptable way of paying.

The Escrow Holder Will:
The Escrow Holder Won't:
  • Write escrow guidelines
  • Request title inquiry
  • Meet lender's guidelines as outlined in the escrow agreement
  • Accept payments from the buyer
  • Prorate insurance, tax, interest and other payments according to instructions
  • Record deeds and other documents as instructed
  • Obtain title insurance policy
  • Close escrow when all terms of agreement of seller and buyer have been met
  • Disburse funds and finalize instructions
  • Tell you what's best - the escrow company has to remain an impartial, third-party status
  • Dispense opinions about tax implications

Mortgage Escrow Account

Creating a Mortgage Escrow Account helps keep track of on-going expenses while there's a loan on your house. Escrow Accounts are contributed to monthly by the home buyer (who is now the homeowner), but there is also a lump sum that goes into the account at closing.

Now you know more about how to close on your future home. And, you can be a smarter home buyer and future homeowner.