An Escrow Account is a saving account where money is deposited for paying home insurance and taxes. It is opened by the lender to help you with the mortgage loan. If you have satisfactorily paid some amount on the mortgage loan, the lender can discharge you from any further payments through the Escrow account.
There is one more type of Escrow Account that is maintained by the Escrow Agent who can be an attorney, based on the agreement between the buyer, seller and the agent itself. The account is kept till the time the buyer regularly transfers the funds to the account and the conditions are fulfilled by the seller.
The need of the Escrow account lies in the protection of the lender specifically, so as to safeguard him in the case of any loss where the property is insured and the loss, if any can be covered easily. On opening of the Escrow account, there is a need to deposit the money regularly for taxes and insurance premiums and that too well in time.
Escrow Agents
To deal with the property and real estate matters, many vendors and buyers feel the need for an intermediate person, called the Escrow agent whose main role is to check whether the buyer has put in the agreed amount in the Escrow Account and has paid the seller once he has delivered the required service or source code to the seller.
With the up-growing online technology, online escrow services have also taken a boom. But to avoid the chances of frauds online, there is a need for reliable and authentic online escrow agents.
Some standard guidelines for Escrow Account
For proper working of the Escrow Account, some standard guidelines are to be considered like:
- The Real Estate Settlement Procedures Act restricts the amount that can be put into the Escrow Account
- To avoid any confusion regarding the Escrow Account, help from Escrow Account Consultant should be done.
