October 14, 2019
There are often pricing differences for loans that involve setting up an impound account and those that don’t. Control, and security, of funds is important. Orion’s brokers know what “escrow” is, but sometimes it is helpful to see a refresher in order to help you explain it to your borrower.
In real estate, escrow is a neutral third party that buyer and seller, or in the case of a refinance the borrower and the lender, use to transact funds from one party to the next; also referred to as the settlement agent. But before we get too far “into the weeds,” Orion believes that it is important for our broker’s clients to understand where it fits into their loan being processed.
Good brokers help your borrowers every step of the way: an introductory meeting to understand their needs, taking the application, keeping them updated, locking in a rate with Orion, funding the loan, and explaining where the monthly payments go. When the loan is moving closer to being funded, brokers work with their clients in setting up an “escrow account.”
Escrow plays a vital role in real estate transactions. Large sums of money flow through escrow companies for purchase and refinance transactions. From whom? To whom? Where, when, and how much? Escrow is not only charged with making sure the initial instructions are followed, but also that neither party is able to change the transaction without the consent of the other.
At closing, escrow is responsible for disbursing funds to all the parties and services involved in the transaction, refunding overages to buyers or borrowers, pay fees to termite, title, home warranty, lender and themselves, payoff any liens currently on the property such as the seller's mortgage or tax obligation and transmit the net proceeds to the seller. After the closing, escrow provides a very detailed accounting of all funds received and disbursed to all parties. Orion is involved, as is the broker, and our AE’s can assist.
Agents and lenders cannot require that a particular escrow company be used on any transaction; buyers and sellers have the opportunity to request a specific company if they choose, though it is customary in our marketplace the seller, or the seller's agent, is given the choice of this service.
For buyers, opening escrow is great news as it means their offer to purchase a new home was accepted. Closing escrow is even greater news as it means they now own their new home with your help, and it is another way a broker to remind clients of a broker’s value!