What is Escrow? | Valor Lending Group
What is Escrow?
Let me shine a light on your question!
Simply put, escrow is the process when a neutral, third party is in charge of holding something of value—usually cash—until a transaction between a buyer and seller is complete.
It also means different things for the home buyer and seller.
- A buyer agrees to pay a percentage of the price of the property into this third party account for safekeeping.
- As a seller, you agree to take the house off the market while it’s in escrow and make it available for inspections.
Firstly, the main purpose of escrow is to ensure a fair and smooth transaction from beginning to end.
Starting the process | What is Escrow?
The process starts when you identify the home or investment property you would like to purchase, and a seller accepts your offer.
You can do your own research and use a escrow agent of your choice or your real estate agent can give you some recommendations who the seller and yourself agree upon.
Next you will send in your earnest money deposit. The EMD (Typically between 1-3%) is payable to the escrow company. They hold your funds until the sale is final.
Your Mortgage Loan and Escrow
Often most mortgage lenders will request an open escrow account for monthly taxes and insurance payments when providing a loan from them to buy a home or investment property. The account would be in your name, the money paid by you is held there and accessed by your mortgage lender.
Your mortgage lender sets up your account after you have closed on your home or investment property. You pay into it every month as part of your mortgage payment. Typically, 2 months’ worth of expenses (monthly taxes and insurance etc.) is always required in your account. This helps if your taxes or insurance premiums increase unexpectedly.
Is it required?
Finally, for most mortgage lenders out there it is mandatory that you open escrow.
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Recap of our Loan Products
- Hard Money Loans (20% down / minimal documentation) Typically Fund in 7-10 days.
- Stated Income Loans (Great for business owners and self employed ) No tax returns!
- 100% financing is available (we can cross collateralize other properties if there is enough equity)
- Valor VA Home Loan 100% financing up to $1.5MM
- Rental Property Loan – No tax returns or DTI calculation! Based on subject property cash flow – No DSCR Coverage needed!
- Flipper & Rehab Loans (Flip a property with one of our many options)
- 2nd Position Loans up to $5mm
- Raw Land & Lot Loans
- Ground up Construction for spec homes, custom homes and commercial ground up.
- Farms, Vineyards, Ranches and Agricultural Properties (25-30% down)
- 10% down Jumbo’s up to $1.5mm
- Manufactured Housing / Mobile Homes (20% down / 600+ credit score)
- Acreage Properties
- Commercial Loans up to $500mm
- 3% & 5% down Conventional Loans– LPMI (Lender paid mortgage insurance)
- Foreign Nationals Loans (no social security or residency required)
We Also Offer:
- Conventional Conforming Loans
- High Balance Conforming
- Jumbo Loan Financing | 10% down Jumbo to $1.5mm
- FHA, USDA
- Reverse mortgages up to $1 Million Value
- Cash Out Refinancing
**Rates and terms subject to change without notice
We are never too busy for your referrals.
For the most up to date mortgage news visit: Mortgage News Daily
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