What are escrow fees

basics

The trust company usually acts as a neutral intermediary between all parties involved in a real estate or mortgage deal.

These parties may include:

  • lender
  • estate agents
  • insurance agents
  • appraiser
  • notaries

A mortgage loan usually involves a lot of paperwork. This is necessary to protect all parties involved including buyers, sellers, lenders and others.

The trustee also handles the transfer of funds between the parties. A lender transfers money to an escrow account. If it is an equity payout refinance, the trustee will deduct the applicable fees owed to other parties and pay the remainder to the borrower.

If the transaction is a real estate purchase, the trustee receives money from the lender, pays off any existing mortgage and closing costs, collects any buyer deposits, and passes the remainder on to the lender as the sale proceeds.

After each transaction, the relevant public records are updated to reflect ownership of and liens on a property.

It is a critical task that requires meticulous record keeping.

How Escrow Affects You

Escrow fees typically range from $500 to $1500 depending on loan size. The escrow fee amount may change depending on the size of the loan or transaction.

Look for escrow services

The escrow service is typically chosen by the brokers in the case of a property purchase and the lender or mortgage broker in the case of a refinance.

Professionals who have closed many deals can usually get a better price per deal from an escrow company, which in turn can pass the savings on to you.

You can ask how the escrow agent is chosen and find out how their prices compare.