Have you heard the term “escrow” and wondered what it means?
Don’t worry you are not alone.
There are many specialized words used in real estate and trying to understand all the definitions can be overwhelming. This article provides a quick breakdown of what it means to be in escrow and the terms associated with it.
Broadly speaking, real estate escrow means putting something, such as a deed or money, in the custody of a neutral third party until certain conditions are met.
What does it mean when a house is in escrow?
After a seller accepts a buyer’s offer, an unbiased third party “escrow agent” is recruited to handle any documents or monies exchanged in the transaction of the home, until all conditions of the sale are finalized.
Why use escrow?
It protects all parties involved in the process of selling/buying a home. On the seller’s behalf, it ensures that the buyer is bringing a qualified offer to the table. For the buyer, the escrow delivers the proof that the title of the home is in good standing, and that its ownership is indeed that of the seller.
Here are a few other terms associated with escrow:
- After closing the purchase, you may open an escrow account with your lender. In doing this, you pay a little extra every month which goes toward paying property taxes, insurance, and the like associated with owning a home.
- An annual assessment performed by your lender to ensure that an adequate amount of money is being paid to cover all escrow-paid expenditures.
- Payments made from your escrow account toward property expenses as they become due.
Knowledge is power and the more knowledge you have when entering into a real estate transaction, the better off you are. Having a clear understanding of the terminology commonly associated with buying and selling property, will allow you to ask the right questions at the right time and be better informed in the process. A Team Anders Agent can ensure you have all the information you need to make smart decisions. Contact us today for more information!