"The escrow agent is escrowing money for my mortgage escrow while we're in escrow". Huh?
Escrow is a word used often before, during and after a home purchase. It is a person. A process. An account. So it can be confusing.
PERSON: An escrow agent is a disinterested third party whose job is to ensure the outcome of an agreement of terms, funds or process. Most title companies act as the escrow agent in a home closing.
ACTION: To escrow funds is a verb and that means monies will be held in a separate account for a purpose such as a repair, a debt, or payment for a specific pending task. Once the task is proven to be completed, the escrow account is liquidated to the person specified in the agreement.
ACCOUNT: A mortgage escrow account is required by most mortgage holders or banks, to manage and ensure the homeowner's payments to homeowners insurance, property taxes and other obligations on the account. The escrow account is funded each month with the homeowners mortgage payment, paying 1/12th of the annual taxes and insurance. And the bank pays the bills as they come due, making it easier on the homeowner to pay two fewer bills!
The escrow people, process, and account, ensures transparency, accountability, and mutual trust among the parties, contributing to a more secure and efficient transactional environment.
If you have any questions regarding this or other lingo, email us [email protected]
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