What to Know About Escrow
What It Means, and What You Need to Know
Life can be confusing enough as it is, and it can seem REALLY confusing when you are looking to buy a home for the first time. Without an experienced real estate professional working with you, terms like "escrow" might throw you for a loop. In today's blog, we'll talk about what escrow is, how it can benefit you during the home buying process, and how we can help you here at the Ask Cathy Marketing Group along the way.
What Does the term "Escrow" Really Mean?
In simple terms, escrow is when a third party holds money from the parties involved in a real estate transaction, typically holding funds from both the buyer and the seller depending on the specific details of the contract. The person in charge of handling the escrow account is called the "escrow agent" and they are in charge of disbursing the money when appropriate, and watching over it while the stipulations of the contract are dealt with. In essence, if you hear that the money is in escrow, it basically means that the money has been put into an escrow account, and is under the watchful eye of the escrow agent.
Different Types of Escrow Accounts When Buying A Home
When working with an escrow account, it's important to know the different types of escrow accounts that you could or will be working with. When you have your offer accepted when buying a home or you accept an offer as the seller of a home, the buyers will begin by putting money into a home buying escrow account. This is the account that will be used when putting down any money before the transaction is closed, including the good faith deposit, which will be applied to your down payment if the transaction closes. After the transaction has closed, the seller will no longer participate in any escrow accounts, but the buyer will need to start paying into a new escrow account set up by your lender that you will use to pay the tax and insurance bills on your mortgage. These charges can change month by month, as taxes and insurance rates change. Additionally, depending on your lender, most will require you to have two months' worth of estimated costs in your escrow account at the time of closing.
Benefits of An Escrow Account To You
The biggest benefit of depositing money into an escrow account is the knowledge that the entire transaction and your money are being watched, and everything is being handled in a way so that nobody is being taken advantage of. On the buyer's side, if the inspection turns up something that could endanger the sale of the home, you don't have to worry about not being able to potentially get your money back. Escrow accounts can also benefit the seller by giving the buyer confidence in putting a good faith deposit down, knowing that everything will be handled appropriately.
Work With the Team That Will Handle Your Transaction From Start To Finish
When you are going through the home buying or selling process, it's important to not only have the right real estate agent who guides you through the process, but someone who is going to track the transaction from start to finish to make sure there are no surprises along the way. At Ask Cathy, we have our very own closing coordinator who is in charge of making sure that nothing gets in between you and your new home. Want to learn more about our process or talk with an agent in person? Give us a call at (816) 268-4033 or contact us below to set up your free, no-obligation consultation!