When many people start looking for a new home, they wonder what they should choose and how much of an investment it will be. Although many people aren't quite sure about what their new home will look like, the fact of the matter is that there are many aspects to be mindful of when it comes to real estate. From paying attention to how much things cost to looking carefully at your options, it really pays to understand and apply a little wisdom before you break ground on a project. Check out these posts to find out great tips about real estate.
Just when you think you can relax and wait for the closing, your real estate agent utters the words "under escrow". For some, this term sounds a bit intimidating and a lot confusing. This term can also have more than a single meaning depending on local customs, so read on so you'll know what to expect when you encounter escrow during your home purchase.
What Is Escrow?
Many people who work with banking and financial matters are familiar with the term escrow. It usually refers to an account where funds are held temporarily and for a specific purpose. Take this example: Your mortgage payment is due each month and your property taxes and homeowners' premium is due once a year. Rather than pay all three separately, the taxes and insurance are divided into 12 equal payments and added on to your mortgage. The funds are held in escrow and then paid at the appropriate time. Escrow, however, can have a more general meaning as well.
Over time, escrow has evolved to include a way to handle home closing practices. When you "come under escrow" (real estate slang) you have signed an offer to purchase a home and the closing date has been set. Part of escrow is to ensure the security of your down payment and other funds that are expected to be paid during closing. A special escrow account is set up to hold funds for things like a down payment and more. Often, the closing is handled by an escrow company. In some places, the closing is hosted by a real estate company or the title search company. Either way, escrow will figure prominently at your closing.
Not only do escrow companies keep funds secure until the closing, but they are also involved in making sure that everything goes smoothly and that the closing happens on time. A number of tasks await both the buyers and the sellers during escrow and the escrow company oversees all of them. Take these tasks, for example:
Don't be confused by the two meanings of the word escrow — they are both closely related to each other. To learn more about escrow and the escrow process, or for more information about residential property, talk with your real estate agent.Share
28 February 2020