The escrow process can seem to be unfamiliar and stressful, especially when handling all fees that arise when buying a home.
As a first time buyer, you may not understand escrow fees. Luckily, this guide will help give you a better understanding about the escrow fees and how much you need to pay.
Let’s dive in!
How Escrow Fees Work
The escrow fee is one portion of the closing costs when buying a home. There are many other closing costs for the buyers like notary fees, escrow funding, lenders title, etc that are given to the buyer toward the end of the escrow process.
This fee is specifically for the escrow service. The escrow fee is given to the escrow company as commission for their service throughout the escrow process.
At this point you might be asking, why am I paying an escrow fee? Can’t I just buy my house without an escrow company?
Well, maybe so but it is very highly suggested you do use one. An escrow company is the impartial intermediary between the seller and the buyer that holds anything of value through the entire process. This includes the documents, earnest money, and anything else for the parties.
Especially since the escrow is long and meticulous, having an escrow company just gives the parties assurance that everything is being done correctly.
Not only that!
Escrow companies lower the possibility of fraud and make sure that both parties are holding their end of the deal.
So using an escrow company and paying the fee makes life a whole lot easier in the long run.
What the Buyer Pays in Escrow
The amount the buyer pays for in the escrow fee changes case by case. It can either depend on the county you live in or the negotiation between parties.
Some counties or states explicitly say which party has to pay the fee.
Here are some examples about counties that say who pays the escrow fees in California:
- in San Diego county both parties pay 50%
- in Santa Clara county the seller pays the fee
- in San Francisco county the buyer pays the fee
Make sure to check if your county or state specifies which party pays the fee.
If your state or county does not indicate which party pays, it is completely open to negotiation that it is split or one party pays it fully.
If there is no specification by your county or state, then there is no rule for who pays the escrow fee.
The buyer only pays for their portion of the escrow fee, while the seller has much more costs.
Here’s an example of escrow fees and how to do the calculations:
Choosing Your Escrow Service
Escrow can be a complicated process, but it doesn’t have to be. The escrow company you choose will be the determining factor on whether or not it all goes smoothly.
Here at New Venture Escrow, we ensure an escrow process as smooth as possible with our cutting edge technology and ambitious attitude.
Contact us for an easy and convenient home closing escrow experience.