Understanding the Escrow Process and What Title Does

What is the escrow process all about and what does title do? To help me answer this question I have Diana Holquin from WFG National Title with me today.

As an escrow officer, Diana takes instructions from the buyer, seller, and lender and then brings them together. After the buyer and seller both sign the paperwork, she records everything and disperses all the funds to everyone involved. She makes sure everything on the contract is executed correctly from contract to close.

When the buyer and seller sign a contract, they agree on an escrow deposit, which will be handled by a professional like Diana. In the event that one of the parties defaults, there has to be signed cancellation instructions from both parties and then that money is refunded back to the buyer or seller depending on the instructions. Otherwise, the money basically sits in the trust account where it will remain unclaimed until both parties agree about who its rightful owner is.

Of course, there are fees for both the buyer and the seller. The escrow fee is what Diana helps you take care of with escrow instructions and all of the backup documents. For a $300,000 home purchase, this fee is usually about $750 and is split between the buyer and the seller.

The seller also has to pay the owner’s policy to ensure that the buyer is given a clear title. For a $300,000 home, the seller is going to pay about $1,400 to $1,500 for this.

The most important fee for the buyer would be the lender’s policy. This is to ensure that the lender is going to be in first position as well as that there are no liens or judgments on the property. The price for this fee actually depends on the loan amount, not the sales price.

Transfer tax is customarily paid by the seller, but it does change based on the contract. The price for this is $5.10 per $1000 of the sales price.

If you have any questions about title or escrow, or if you’re thinking about buying or selling, please feel free to reach out to us. We look forward to speaking with you soon.