Home Buying 101: What is Escrow?
There are many interesting terms in the big wide world of real estate. If you’re not familiar with them, it can appear confusing and sometimes even frustrating at times to keep up with all the home buying lingo.
Thankfully, that’s where BSR Realty Group comes in. We’re here to make the home buying process and breeze, and with that, comes education and encouragement.
One of the main terms you need to know going into the home buying process is “escrow”. If you’re new to real estate verbiage, then no worries – we’re here to break it down for you!
What is Escrow?
Escrow is defined as an arrangement where a third party holds money or property for a period until a particular action has been met. Escrow is included in real estate to protect the buyer’s deposit, so the money goes to the right party per the conditions of the sale. Just as well, it’s included to hold the homeowner’s money for tax and insurance purposes.
It’s easiest to think of escrow as the middleman who handles the risk on the buyer and seller transaction process.
How Does Escrow Work?
Escrow begins once a home is under contract. This means, if the sale happens to fall through for some reason, a third party has hold of the money until the details are complete. It essentially is a security measure that protects all parties involved and ensures that the contract agreed upon is sustained.
What Does “In Escrow” Mean?
When you officially reach the status of “in escrow” it means that temporarily, you are in the holding process which can’t be released until the conditions are satisfied. Typically, you are in escrow until the process involving the financial transaction has been completed. After the items in the escrow agreement are met, then the transfer of the ownership can proceed.
So… What’s Next?
When you go through the buying process and you’re ready to take the next step, there are a few things you need to do before reaching escrow status. You’ll start with opening your escrow account then await your lender’s approval. From there, you’ll secure your financing and go through the home inspection process, go through a few more insurance processes, and eventually, you will do the final walk-through. Finally, you will close escrow.
This might seem like a hefty load of information…and it is! Thankfully, your realtor will be there from start to finish, so you won’t have to go through any step alone. Are you ready to get started on the home buying process and learn more about the steps involved? Give BSR Realty Group a call today!