What Is Escrow?
by Takara Alexis
If you're like many Americans who are in the process of buying a home, you may ask yourself: what is escrow and why do I need it? Well, quite simply, an escrow account protects all parties involved. Whether you're the seller or the buyer, you want to be assured that no funds are transferred until all arrangements of the transaction are met. This provides both parties with the reassurance that is essential when completing large or important transactions.
Escrow is an agreement in the form of a contract, deed, bond, or other written legal arrangement where funds are put into the custody of a neutral third party until specific circumstances are accomplished. The escrow agent then transfers the asset upon completion.
In the case of mortgage escrow, homeowners often pay private mortgage insurance and property tax into an escrow account, in addition to their mortgage payment each month. The mortgage holder then makes payments out of the escrow account on behalf of the homeowner when the bills are due.
A real estate broker can be helpful in recommending a suitable escrow service. For obvious reasons, it's important to work with an experienced escrow company well versed in the area of need. Your Realtor should play a role in coordinating the escrow process. Supervising this process is vital in avoiding any untimely delays.
The closing costs associated with escrow services may vary widely when it comes to real estate. Escrow fees are commonly decided by following a minimum fee schedule, though fees will fluctuate, depending on the escrow company and your location.
When the escrow process is complete, the escrow service records the new deed in the buyer's name, which finalizes the transaction. Though, funds are commonly held in escrow after the close, this is typical when it comes to paying contractors that may have work that isn't complete.
The need for fair and objective transfer of property is very crucial in today's world. The escrow process gives peace of mind that is necessary when transferring valued property. Whether it's real estate you are looking to transfer or other items of value, escrow provides an unequaled solution.
