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What Exactly is Escrow?

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Escrow is a word that agents throw around on a daily basis, but the average person may not be familiar with it.

There are several stages. Let's say you made an offer on a home several weeks ago and wrote an earnest money deposit check, which was placed in escrow. This means it was given to an impartial third party while you and the seller negotiate a purchase contract. If you are working with an agent, they will take care of creating the escrow.

At this point, the lender will refer to your escrow account, which is also called your reserved or impound account. Essentially, it is money set aside for taxes, HOA fees, and homeowners insurance. The lender may have an in-house department that takes care of the account or there could be a third party taking care of it. 

Next comes the close of escrow. When the buyer and seller have signed all the paperwork and all the funds have come in, the closing agent disperses the funds and oversees the recording of the documents with the county. When you go to sign, it doesn't mean you've closed escrow - after all the parties have signed, the title company and the lender will proceed to record the title. 

Once the deed is filed and the title of the property is transferred to the buyer, the deal is complete and escrow is closed!

And that's it! If you have any questions about this or any other real estate topic, don't hesitate to ask! We would love to be your Phoenix real estate resource!