What Is Escrow in Real Estate and How Does it Work?
“What is escrow in real estate?” is a common question when it comes to the understanding of how to fund one’s first home.
Having an escrow means giving your funds to a third party to hold onto, so they can release them when you wish to sign off on a home purchase. However, there are many nuances to the concept. Alongside an average down payment of $49,000 for first-time buyers, according to Intercontinental Exchange, this can significantly help when money is tighter.
Read on to discover the best way to go about sourcing such an agreement and what it can do for you. By the end, you should have a good idea of why Schulte & Co. is best-placed to help you get the escrow that suits your personal needs to bring you the home of your dreams.
How Does Escrow Work in Washington State?
With Washington levying $8.93 from every $1,000 of a property sale due in 2024, you must have a system in place to pay this, ensuring the buying process proceeds smoothly.
In Washington, an escrow holder will perform their due diligence to ensure that everything is in order with a sale, protecting themselves and you as they hold onto your funds. As such, they will verify the title status of any property with the title department, confirming that any liens and payoffs are clear and will not likely disrupt the escrow process. Then, they will await loan approval and a few other triggers related to a progressing sale, and then inform you that you can make any escrow payment into an account with them.
The escrow holder will also produce a settlement statement. This document is for the benefit of both the buyer and seller, and will list every credit and fee involved in their work, so that all parties can see where the money goes. Doing this is imperative for transparency on both sides and to build trust in negotiations, which is reflected in signing appointments and notary sourcing, which they can often also provide for you.
After completing all these steps, the escrow holder can submit your documents to the county recorder in exchange for a fee, ensuring everything is in order before you proceed with your purchase.
Step-By-Step Escrow Process
The process of returning the funds offered to the escrow office can be complex. The following is a simple breakdown, however, talk to your escrow holder for more information on the nuances.
Once the buyer has signed that they will be working with the escrow holder, they can then start to wire funds to them
The escrow holder collects the money needed to pay off taxes and insurance on the home
When the amount of money reaches a target, both buyers will need to sign the deeds and disclosures, confirming the sale
Finally, the deed of record confirming the signing is sent to the county, finalizing the process
On receipt of confirmation from the county, the money saved in the escrow is finally released
You should receive your closing disclosure, which contains information from your mortgage lender, within three days after signing. As this document is so critical for your needs, make sure to follow up if you have concerns about its whereabouts.
The escrow holder will transfer the correct amount of money, to the penny, and provide clear documentation to confirm that this has occurred. You can then have the reassurance that what you receive is appropriate.
How Long Do I Pay Escrow on my Mortgage?
Every escrow is different, and you will need to pay into it so long as your escrow contract requires it. In many cases, this can be as long as the loan or mortgage itself, unless you qualify for it to be waived.
Requirements of an Escrow Officer
In Washington, escrow officers are required to hold a license, either personally or as part of a licensed agency. These requirements ensure that you can trust the escrow holder to follow strict government regulations preventing fraud.
Escrow accounts will also come with unambiguous, written instructions from all parties detailing exactly when the escrow will be released. The escrow officer is not typically allowed to make judgments about this and will follow this to the letter. So, make sure that you understand them too.
They will reconcile their accounts daily to ensure the protection of your funds. As such, you should be able to confirm the amount held at any time. Additionally, if anything appears incorrect, auditing is possible to help you recover your funds and ensure their safety.
How Can Schulte & Co. Assist You?
Schulte & Co. offers a concierge service, meaning they pay attention to your unique and personal needs. With this in mind, they can provide advice and logistical support to ensure that any escrow does precisely what you need it to. With a single point of contact and experts to help review documents for you, they can keep your house purchase on track and on time.
Let Schulte & Co. Help You Close with a Secure Escrow
Now that you can answer, “What is escrow in real estate?”, you can use it in Washington to close your purchase and move from making an offer to having the keys in your hand. Therefore, be sure to carefully review all the escrow documentation, understand your responsibilities, and prepare for the monthly charges.
It doesn’t need to be a complex process. Reach out to Schule & Co. for local guidance and take advantage of their concierge service. Make the whole thing much easier on yourself and secure the home of your dreams.
