I am buying a house and I wanted to borrow more than what the house was worth to fix up the home. What does it mean when they say that it will go into a escrow account?
2007-02-20 16:27:08 · 5 answers · asked by vet 2 in Business & Finance ➔ Renting & Real Estate
Money is typically held by the title company you close at. As the work gets done, an inspector contracted by the bank will confirm the work is completed and authorize payment to the contractors by the title company.
An escrow account must be maintained separately, and cannot be intermingled with the title companies operating accounts.
2007-02-20 17:21:40 · answer #1 · answered by Yanswersmonitorsarenazis 5 · 0⤊ 0⤋
I'm not totally certain. Escrow has two meanings in real estate:
1) when you buy a house, the escrow agent verifies that both parties have completed all obligations and then actually commits the transaction (closing escrow) so that the property is transferred.
2) When you buy a house, you may well have fire insurance (required by most lenders) and property tax. Your lender might charge you an additional amount so that you are collecting your payments for insurance and property tax, in addition to your principal and interest. This extra money is in an escrow account.
I am not sure how extra money to be used to repair a home would be in escrow. It sounds like it would be limited to certain purchases.
2007-02-20 16:36:16 · answer #2 · answered by John T 6 · 0⤊ 0⤋
An escrow account is a bank handled account. The proceeds of your loan will be credited to this account and disbursements will be checked by the escro agents. They will simply verify if the amount being disbursed will be used for the construction of your house. Usually the whole process is shown in the escrow agreement so make sure that you clear with the bank any thing that concerns you in the document.
2007-02-20 16:44:00 · answer #3 · answered by Jillie 1 · 0⤊ 0⤋
It's a separate account that the bank handles. They will pay the bills for you pretty much. You really don't have access to the money. So if your money is in there for repairs then the bank will pay the contractors directly for the work they are doing.
I know I pay all my taxes through my escrow account and it's nice because it's a bill that I don't have to worry about when it comes around, and I know that I always have the money for it.
2007-02-21 01:36:51 · answer #4 · answered by photogrl262000 5 · 0⤊ 0⤋
What that means is that the cash will go into an account which you can spend out of to purchase stuff for the house. This is done so you do not have the cash to just go bindge shopping. It is a safety the banks insist on. Otherwise their customers can get a loan for fixing the house up and then they can just binge on a vacation instead. With a large sum of money , this is a wise idea.
2007-02-20 16:38:18 · answer #5 · answered by daddyspanksalot 5 · 0⤊ 0⤋