What Is Mortgage Escrow?

Buying a home involves much more than finding the right property and getting approved for a mortgage. Between the accepted offer and receiving the keys, there is an important step called escrow.

Escrow provides a protected middle ground where a neutral escrow or settlement agent helps coordinate the money, documents and conditions needed to complete the transaction. Instead of the buyer and seller handling everything themselves, the escrow team helps make sure each part of the deal is completed properly before the transaction closes.

In California, escrow companies are regulated to help protect funds entrusted to them, giving buyers and sellers an added layer of security during the transaction.

What Happens During Escrow?

Once an offer is accepted, several important tasks need to be completed before closing. Depending on the transaction, these can include:

• Holding the buyer's deposit funds
• Coordinating required documents
• Working with the lender to satisfy closing conditions
• Confirming homeowners insurance
• Preparing documents for signing
• Coordinating the transfer of funds
• Making sure the transaction is ready to close

For buyers, being prepared can make the escrow process much easier.

How Buyers Can Prepare

A little organization can prevent unnecessary delays. Buyers should:

• Provide requested documents promptly
• Deposit required funds on time
• Arrange homeowners insurance
• Respond quickly to questions from the lender or escrow team
• Carefully review the Closing Disclosure before signing
• Stay in communication with their mortgage professional

Your mortgage professional can help keep the financing side organized while the escrow team coordinates the closing process.

Think of Escrow as a Relay Race

Escrow is a little like the final stretch of a relay race. The buyer, seller, lender and escrow team each have responsibilities that must be completed before the transaction can cross the finish line.

When everyone completes their part on time, the process can move smoothly toward closing. When something is missing or delayed, the finish line can move farther away.

The good news is that buyers do not have to navigate the process alone. Experienced real estate and mortgage professionals can help explain what is happening and what needs to happen next.

Escrow Brings the Deal Together

Escrow is more than paperwork. It is the process that helps turn an accepted offer into homeownership.

By keeping documents organized, responding quickly and working with the right professionals, buyers can reduce unnecessary stress and keep their closing on track. After all, the ultimate goal of escrow is simple: complete the transaction safely and get those keys into the buyer's hands.

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.