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Escrow most generally denotes the process of holding money or property titles or deeds, by an impartial 3rd party throughout the operation. In case of a transaction of big proportions, like a real estate transaction, the money is kept safe in an escrow account. The escrow services are provided by companies that specialize in this service.
Types of Escrow:
- Real estate escrow serves as arbitration between all the members in the deal, the buyer, the seller, the lender, agent and Title Company. Initially, the agent delivers the purchase contract and the buyer’s money to the escrow company. As soon as the purchase agreement is carried out, the buyer naturally applies for a mortgage loan.
- Online escrow works by the process where a person entrusts the money in control of an autonomous and a licensed 3rd party in order to safeguard both the buyer and the seller.
- Banking escrow can be briefed with a simple day-to-day example. The ATM that we use frequently to withdraw money as and when we need is a typical example. Our money is in safe hands of the machine. If in case of a mishap in transaction, the money is returned.
Contents of an Escrow:
- Details about the escrow agent.
- Duration of the escrow, the beginning and the ending dates of the escrow.
- A list of the entire documents that are being submitted by both the parties.
- The form of transaction used by both the parties.
- The total amount of money entrusted with the agent.
- The approval of the escrow agent.
- Liens as well as mortgages that needs to be settled.
Some reasons for people opting for Escrow:
- Safety – the system safeguards both the buyer and the seller. But it is always safe to get to know whether the company that you are choosing is legit.
- Convenience – the payment is done in an agreed setting. The party that needs to settle doesn’t have to issue separate checks, the agent takes care of it.
- Well-timed payments – the money is withdrawn from the account only when an amount is due.
- Define online escrow.
- What are the contents of an escrow?
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