Dan is absolutely correct with what he said. I would like to add that an escrow account is also used when an offer is made on a home. In this situation, the earnest money deposit on an accepted offer on a home is placed into an escrow account. This account is usually held by the listing broker. The funds are released from the account to the seller at settlement. If the sale does not go through because of one of the contingencies, the funds are returned to the buyer. If on the other hand the buyer suddenly changes their mind and breaks the contract, then the seller may receive the earnest money deposit or if in the case of a dispute, the moeny will be held in escrow until the dispute is resolved.
Brigita McKelvie, REALTOR, e-PRO, GRI
Keller Williams Real Estate, Bethlehem, PA
Office: 610-867-8888 Direct: 610-393-9424
Escrow is an account the mortgage company has for you to pay your property taxes and home owners insurance. When you make your monthly payment, they put a portion into this account so when the taxes are due, they can pay them. Most lender require you to escrow them. It ensure they get paid. If you dont want to escrow, you might ahve to pay a small fee to do so.