As you start your journey into homeownership, we know that you are going to have a lot of questions. We are here to help take some of the mystery out of home buying by sharing with you the knowledge we have gained through years of experience. It is our goal to help you feel confident and informed.
What Do Title and Escrow Companies Do?
Title and escrow companies play a crucial role in protecting every member of a real estate transaction, including the real estate agent, the homebuyer, the lender, and the seller. Their work is the final piece of the puzzle before a homebuyer receives the keys to their new home.
They manage the movement of funds and preparing of closing documents during the purchase process.
Title and escrow companies have 3 key responsibilities:
1) Check the Title and Issuing Title Insurance
They conduct an exam to verify that the title is free and clear of any liens or other encumbrances. Once they have determined that the tile is clear, they issue a title commitment to the lender and the buyer.
2) Manage the Movement of Money
They handle the accounting aspect of the real estate transaction and move money between the transaction parties. The company is the impartial intermediary and holds the money in an escrow account until the closing takes place.
3) Prepare Closing Documents
They prepare and generate closing documents. Typical documents include:
-HUD-1 (list of all the charges paid by buyers and sellers)
-Closing Disclosure (form issued to the buyer that includes information on monthly payments, loan terms and closing costs)
-1099-S (IRS form filed when a property is sold or exchanged)
-Deed (legal document that transfers ownership from the seller to the buyer)
Be on the lookout for your next informative guide: What are closing costs?
We would love to help you on your journey to homeownership. Please reach out with any questions.