An escrow occurs when a neutral third party holds the documents and monies involved in a real estate transaction and ensures that all conditions of the transaction are met. Escrow also refers to a special account that a lender establishes to hold monthly installments from the borrower to cover property taxes and insurance.
An escrow holder is a neutral third party who takes instructions based on the terms of the real estate transaction and, when necessary, the lender’s requirements.
Key terms and phrases commonly associated with escrow include:
Funds that a mortgage servicer withdraws from a borrower’s escrow account to pay property taxes and insurance.
A lender’s periodic examination of an escrow account to determine if the lender is withholding enough funds from a borrower’s monthly mortgage payment to pay for expenses such as property taxes and insurance.
Arrangements that an owner makes to oversee the sale of one property and the purchase of another at the same time, also known as a concurrent closing.
An escrow closing occurs when all conditions of a real estate transaction are met and the title of the property is transferred to the buyer.
A firm that acts as a neutral third party to ensure that all conditions that the buyer, seller, and lender establish in a real estate transaction are met.