What is an Escrow Account?
An escrow account refers to the financial instrument, managed by a third party, holding in escrow various funds (see above) involved in a real estate transaction. While the home is in contract, the account usually holds a buyer’s initial deposit on the home. After the sale closes, an escrow account might hold a homeowner’s property taxes, mortgage insurance and homeowners insurance premiums. Some lenders require mortgage-holders to have these accounts, to make sure that certain bills are paid on time.
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