Managing Existing Loan Payments During Escrow

A Message for Sellers:

If you are a seller whose property is in escrow, it is important for you to make timely payments on your existing loans. Even though the property is sold and escrow has been opened, the seller’s obligation to the lender continues until the time the lender receives the payoff funds. Regular loan payments should be made as they become due in order to avoid late charges and negative effects on your credit report.

As the closing date approaches, it is a good idea to talk to the escrow officer to coordinate the final loan payment. If the escrow is closing within the next few days and a late charge would not be assessed, you may elect to wait a day or two to make a payment, as the lender is about to be paid in full. When a loan payment is made immediately prior to loan payoff, the lender is likely to require that funds equal to the amount of the payment be held in escrow to allow sufficient time for your check to be paid by your bank. The escrow officer will refund this money to you as soon as the lender’s hold is released.

Another option is to make your payment well in advance of your closing date. This can be the preferred method for the seller who is particularly concerned about avoiding the inconvenience of a hold on his funds after closing. Despite careful planning, the hold may be unavoidable, as many factors can influence the closing date of an escrow, and lenders’ policies vary. Remember to keep your existing loan current during the escrow period. Consult with your escrow officer or real estate agent if you have questions.