WORD OF THE WEEK- ESCROW
If you’ve ever heard a discussion on real estate, chances are the word “Escrow” has been thrown around. Perhaps you have a vague understanding that it has to do with holding money, but we will break it down for you here.
There are two different meaning for the word “escrow” depending on what part of the country you are in. The overall definition is: “To place money or legal documents in the control of a third party until specific conditions are met”. In the Western US, when someone says they are “in escrow”, they are referring to going through the entire process of buying a home. The alternate meaning for escrow is used here in Florida and is referring to the escrow account. The escrow account is used by mortgage lenders. These accounts hold money for property taxes and homeowners’ insurance, which the lender pays on your behalf. Paying into an escrow account ensures the lender that bills will always be current. Some lenders require their borrowers to maintain an escrow account, especially if they have less than 20 percent for a down payment.
Whether you are West Coast or East Coast, we hope that this short explanation will help you feel more confident when you discuss escrow!