2007-06-20 13:55:59 · 5 answers · asked by tito 1 in Business & Finance ➔ Renting & Real Estate
Escrow simply means that a 3rd party holds documents and funds and distributes them according to the instructions provided as the terms and conditions are met.
In real estate there are 2 common types of escrow. When you are buying and selling, you are "in escrow" in that the closing agent -- title company or attorney -- gathers all of the documents and funds and hands them over as the terms of the sale are completed. The seller gets their money, the lender gets the executed mortgage documents, the buyer gets their deed and keys, and all of the paperwork is signed and recorded as required by law and the buyer's and seller's instructions.
The other type of escrow is an account (sometime called an impound account) maintained by your lender or mortgage servicing company for the payment of taxes and insurance. You make regular payments into the account as part of your mortgage payment, the insurance company and tax district send the bills to the mortgage company, and the mortgage company pays the bills on your behalf by the due date.
2007-06-20 14:06:24 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
When you purchase a house you have to put up to one years amount of money in Escrow for your home insurance and taxes. The mortgage company keeps it in an escrow account to flex with the ups and downs of the said expenditures
2007-06-20 21:05:56 · answer #2 · answered by My Baby! 7 · 0⤊ 0⤋
Escrow account is a way of putting your Taxes & Insurance into this account so that way you can pay it every month.
Normally you would pay your Taxes once a year or twice a year (large lump sums), and your insurance normally every month or however you have that set up.
This is putting them all together and breaking it up evenly over the year, so you don't have to come out of pocket for SOOO much a couple times a year.
2007-06-20 21:21:39 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Escrow is when you pay your taxes and home owners insurance each month along with your mortgage payment. You take you ins. payment and taxes and divide it by 12 and add those numbers to your payment. You have a side account set aside by the mortgage company and they pay your taxes and yearly premium at the end of the year instead of you having to come up with the full payments at the end of the year. When you buy your house you can set that up then, depends on when you buy to how much it will cost to set up. Hope this helps
2007-06-20 21:10:20 · answer #4 · answered by RTR!! 1 · 0⤊ 0⤋
Even simpler, escrow means "neutral party". You can have an escrow for any transaction. When you "open escrow" you are starting the process and when it's "closed", everyone is happy and there is no more escrow.
2007-06-20 21:17:46 · answer #5 · answered by Anonymous · 0⤊ 1⤋