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Escrow: Multiple Meanings in the Housing Market
If you’ve never bought a home before, you may be unfamiliar with the term “escrow” and its multiple meanings in the housing market. Here’s a quick guide to keep in mind while you pursue a KC home loan.
What is an Escrow Account?
Many home loans in KC require escrow accounts, especially for first time home buyers or home buyers with small down payments. A mortgage escrow account is an easy and simple way to manage your annual tax and insurance payments. Escrow accounts for home loans in KC are designed to make the borrower’s life easier by providing you with a way to pay your homeowner’s association fees, property taxes, mortgage insurance and homeowner’s insurance every month, instead of all at once.
In order to make those payments, escrow funds are collected as part of your monthly mortgage payment. This ensures that your bills are paid in full and on time, without you having to budget for these large payments separately.
What is the role of an Escrow Agent?
An escrow agent maintains all documents and funds related to the transaction until the day of closing for your home loan in KC. The escrow agent secures the property and examines the documents to make sure that the terms of the sale are met on both ends. The purpose of the escrow company or escrow agent is to act as a neutral third party between the buyer and seller and to make sure all the required steps toward closing are completed. In other words, they serve both the buyer and seller of the home. Some examples of escrow agents are:
- Title Company Representative
- Settlement Attorney
- Escrow Company Representative
Closing Your Home Loan in KC
Having a home “in escrow” is a common term used when getting a home loan in KC. This phrase means that you are in the midst of closing your home loan. The escrow company will handle all of the money that must be transferred between you and the seller. There is paperwork involved with each step taken while the home is in escrow. Items that can be held in escrow for home loans in KC include:
- Other assets
The escrow company collects all of this documentation and makes sure all of the documents required for the transaction are completed correctly and on time. If everything goes as planned, the buyer will sign the closing documents, the lender will provide the funds, and the seller will be paid. Escrow will close once the deed is recorded in the buyer’s name. Escrow protects all parties involved by making sure that no funds or properties change hands until all agreed conditions have been met.