Understanding Your New Home Loan: What's the Escrow Agent Do?

By Emily Kerr
LoanPage Columnist

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Buying a new home is exhilarating. The pride of ownership, the decisions to make on interior design, cabinets, floors, carpet, colors, wall hangings, window coverings. There's so much to think about. But all that comes after you've made your decisions on which lender is going to handle your mortgage, what sort of lender you'll use for your new home loan, and taken care of all the documents, title and closing costs, and escrow.


What is Escrow?

Escrow is an account that's set up to hold all the title documents before closing as well as moneys from the buyer, generally two months worth of mortgage payments and homeowners insurance. Escrow protects all the parties involved in the sale, the buyer, the seller and the lender, and the account is held by a neutral third party, the escrow agent.

But just what does an escrow agent do? In the world of new home loans and mortgage payments, the escrow agent seems like one more person to be concerned with. What are the escrow agents' duties?

If you're in the process of getting a new home loan, your escrow agent will be in contact with your lender, providing escrow instructions and the preliminary title report. The escrow agent holds the escrow funds in account. At close, the escrow agent complies with the lender's instructions.

Signing Your Escrow Documents

If your lender chooses to have you send your new home loan documents with the escrow agent, you have the right to request someone from the lender's office be present at signing the documents are from the lender and the escrow agent cannot interpret them for you, so be sure you understand the documents before signing with the escrow agent, and that you've asked your mortgage lender all your questions.

Escrow actually protects everyone involved in the purchase of a new home. It may be confusing, but you're protecting your mortgage, your investment, and your new home.


What Do I have to Do While in Escrow?

About the Author

Emily Kerr is a freelance writer with over 425 articles in print. She writes about everything from home loans to home construction and everything in between.

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