Buy or sell a home, and you’ll learn a few new vocabulary words. One of them is “escrow.” At its most basic, an escrow is something of value. In the case of your real estate transaction, an escrow is your deposit check and important paperwork like purchase and sales agreements.
These are held in what is essentially a holding tank while the buyer and seller work out the details of the transaction. The escrow is managed by an escrow officer, an impartial third party who has nothing to gain or lose from the transaction. The escrow officer is usually a lawyer or title company representative.
The escrow officer makes sure closing goes smoothly and that everyone gets paid what they’re owed. The officer also records the deed and transfers the title to the new owner.
Your lender will also hold an escrow account with you. The money in this account is used to pay property taxes and home insurance.