The holding of money or documents by a neutral third party before closing on a property. It can also be funds held in reserve by a financial institution or mortgage company to pay taxes, insurance, and other mortgage-related items when due.
When someone else holds assets of yours until the terms of a contract or an agreement are fulfilled, your assets are said to be held in escrow. The assets could be money, securities, real estate, or a deed.
The person or organization that holds the assets is the escrow agent, and the account in which they are held is an escrow account.
For example, if you make a down payment on a home, the money is held in escrow until the sale is completed or the deal falls through.
Amounts you prepay to cover property taxes and insurance premiums as part of your regular mortgage payment are also held in escrow until those bills come due and are paid. In that case, you may earn interest on the amount in the escrow account.
- Browse Related Terms: Closing Costs, Closing Statement, Deed, Escrow, Good faith estimate, Real Estate Settlement Procedures Act (RESPA), Refund, Satisfaction of mortgage, Settlement (or Closing) Costs, Settlement agent, Title, Title Insurance, Title Search
The holding of money or documents by a neutral third party before closing on a property. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance.
- Browse Related Terms: Chapter 13 Bankruptcy, Debt-to-income (DTI), Escrow, Escrow Account, Escrow Analysis, Forbearance, Home Affordable Unemployment Program (UP), Housing expense, Monthly Gross Income (MGI), Mortgage Payment, Mortgage Payment Guideline, Pricipal, interest, taxes, insurance and homeowners association dues (PITIA), Primary or Principal Residence, Repayment Plan, Servicer, Underwriting
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