Buying real estate can be a good investment or a personal milestone, but a real estate transaction is not just a simple agreement. It has financial and legal implications that involve numerous parties.
An escrow is a legal arrangement that puts earnest money into the trust of a third party during an ongoing transaction. These escrow funds will be kept until the escrow process is concluded and the contract is fulfilled by both the buyer and seller.
An escrow account is established to facilitate mortgage and tax payments. Each month, mortgage payments are deposited into the escrow account, and the money will be used to pay property taxes, mortgage, and insurance policies associated with home ownership.
An escrow company is a neutral third party protecting the money and interests of the parties involved. They are responsible for two duties which are to handle the funds and prevent the buyer from accessing the deed
The escrow process starts when a seller accepts a buyer’s offer for their house. A mutually acceptable purchase agreement is then signed, and the real estate agent collects the earnest money, and a deposit of good faith to show commitment to the sale.