What to know about escrow accounts

On Behalf of | Jun 9, 2020 | Real Estate |

After a seller accepts an offer to purchase a Mississippi home, the property will likely be referred to as in escrow. This means that a buyer’s earnest money deposit is being held by a neutral party while the sale is pending. Typically, a buyer must find financing, conduct an inspection and complete other tasks before the transaction can officially close. The seller’s deed to the home may also be held in escrow until the sale closes.

A lender may elect to keep loan proceeds in escrow until the transaction closes. At that time, the money will be disbursed to the seller or a party that has a lien on the property. The person or entity managing the escrow account will likely charge a fee to do so. In most cases, the parties to the deal may determine on their own who will pay this fee.

It is not uncommon for a portion of each mortgage payment to be held in an escrow account and used to pay taxes or homeowners insurance premiums. This can be beneficial for property owners as it ensures that these bills are paid on time each year. If tax rates or insurance premiums go down, a borrower may receive a refund from that account. Borrowers should receive a statement from their lenders each year detailing how money in such an account is used.

A real estate law professional may be able to help a buyer better understand what escrow is and how it may impact a home sale. An attorney may also be able to explain what contingencies are and what other rights an individual might have during the home purchase process. This may make it easier for a buyer to close on a real estate transaction in a timely manner.