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escrow documentEscrow is an account opened with a third party during the mortgage closing process that protects the interests of the buyer, the seller, and the lender. It can be compared to placing a friendly bet and asking an impartial third friend to hold the money until the outcome is determined. The escrow officer will take possession of and manage certain documents and funds that pertain to your mortgage until the closing is over. If the sale falls through, all of the documents and funds are returned to the indicated parties.

Where Does the Escrow Officer Come From?

The escrow officer can be someone from an escrow company, someone from the title company, or a special escrow attorney. Different regions of the country use different types of escrow officers, but they all perform the same basic function. They carry out the instructions given to them during escrow and make sure everything stays organized and on track. Because real estate involves the transfer of large amounts of money and valuable deeds and titles between parties, an escrow officer is a safeguard put in place to make sure everything is protected and moderated during closing.

What Sorts of Things Are Held in Escrow?

Examples of items that will be held in escrow include loan documentation, deeds, titles, and instructions on how to complete the process. Various funds may also be placed in escrow, including homeowners insurance premiums, property taxes, earnest money, and down payments. If insurance and taxes are allocated to escrow, this portion of the account may stay active even after the loan has closed, and even as long as the mortgage is open. This ensures that the insurance and taxes get paid each year without the homeowner having to worry about making a separate payment.

What is the State of Escrow?

The state of escrow is simply a time between when an offer is accepted on a property and when funds are released and the deed is signed over to the new owner. The escrow officer is responsible for making sure that everything goes smoothly during this time and that the interests of all parties involved are equally guarded and represented.