.svg)
You did it! You’re in the final stages of the home loan process and your lender is preparing to send everything to escrow. The term “escrow” can seem vague and ubiquitous as it’s used to describe different aspects of the home buying process.
An escrow company is a neutral third-party that handles the monetary transactions for buying or selling a property. They often double-up as a title company so they can handle all of the documentation that transfers property rights between the parties.
During the home buying and selling process, there can be delays or even the possibility of the sale falling through. To ensure all funds are distributed according to the conditions of the transaction, the escrow company will open an escrow account to hold any money collected during the transaction. This can include any money from the buyer or the buyer’s lender. At time of closing, the escrow company will distribute the funds to pay off the seller’s mortgage and then distribute any profit to the seller.
You may also hear a mortgage escrow account referred to as an escrow. A mortgage escrow account is a feature of most home loans and is simply an account where your property taxes and insurance premiums are held. When you make your mortgage payment every month, a part is allocated towards taxes and insurance. Since property taxes and insurance premiums aren’t due every month, your mortgage servicer will hold the funds in the account and then withdraw to make a payment.
Want to know more about escrows, homebuying 101 or how to begin your journey home? Contact one of our home loan experts to get started today!
