Mortgage Lending Library
refers to the process of holding money, securities, documents, or property. is always held by a third party that is impartial to the situation. Once the two business parties involved in the transaction reach an agreement and conclude the transaction, the escrow agent releases the property that is being held in escrow. If you are buying a home or applying for a new home loan, escrow is a term you may hear quite frequently. When you place a deposit on a real estate property, an escrow account will be used to hold the money. You may see references to this escrow account in documents and hear your real estate agent refer to this account. The attorney representing the seller will usually hold these escrow funds, unless you are buying a property from the government. You may also hear about escrow in terms of property tax. Once you buy a property and get a new home loan, you will need to plan ahead for the taxes you will need to pay on your new purchase. The owner of a property pays property taxes into an escrow account, and when the closing date arrives, the buyer will pay for the taxes paid ahead of time. The seller will have the money reimbursed from the escrow account. If there is any dispute during the buying process – for example, if a problem emerges during a home inspection – then closing funds and other money may be held in escrow until the problem is resolved. If you hear about an escrow account in reference to your real estate purchase, you can and should ask who is holding the money, how much being is held, and which financial institution the money is held in. If you have an interest in the money, you should know where it is. In case of a dispute, you do want to be able to trace the funds.