What is Escrow? Recently first time home buyers have joked about either not knowing what Escrow is or being thrilled with themselves for finally learning about it. It is your lucky day, if you are unfamiliar with escrow; you are going to learn now. If you don’t remember anything from this article, remember the concept of the impartial third party – someone with nothing to lose or gain from your real estate transaction.
Now let’s dive further into it. Escrow is not a term we hear every day. The term gets confusing because it has several different meanings in the real estate world.
- Weeks ago when you made an offer on your new home, you wrote a check that has to be placed in “escrow” which meant it was to be given to an impartial third party while you and the seller negotiated a purchase contract. A real estate agent probably took care of creating the escrow.
- Now your lender is talking about creating an “escrow” account, also called a “reserve” or “impound” account, where money for property taxes and homeowner’s insurance will be held.
- To throw more words into the mix, there is such thing as the “closing of Escrow”, which is described by someone called an escrow officer.
All three listed above are accurate uses of the word. An escrow is something of value such as your earnest money check, or documents such as your purchase and sales agreement, that are given to an impartial third party to hold until specific conditions are met. When everything is finished – everybody paid and the deed recorded with the county, the escrow will close.
They will also juggle all incoming paperwork and money from buyers, sellers, agents, lenders and anyone […]