You will come to know about mortgage escrow account when you are going to buy a new home. The term escrow is widely used in business transactions. Under these transactions, the buyers and sellers do not make the exchange of money and goods/ services at the same time. The buyers and sellers wait for the guarantee to deliver their things first and to receive things later on. It is a third party between the buyer and seller, which is known as Escrow, which is known to resolve the trust issue between them. The Escrow works on behalf of both buyer and seller that they will fulfill their obligation to pay money and goods.
In real estate transactions, the escrow service is also one of the standard practices. In these transactions, the escrow acts as an intermediary. The buyer deposits the money with the escrow, and the seller delivers the title of goods to escrow. Until both the payment and document of the claim are placed with the escrow, he will not release anything to the buyer and seller. However, the mortgage escrow account is used to buy the house. That’s why; the mortgage escrow account is not same with the real estate transaction escrow account. Mortgage escrow accounts are mainly for the people who mortgage their property. With the help of a mortgage escrow account, there would nothing go wrong with the property. The homeowner only needs to make a monthly payment in an escrow account, which will be deducted for paying property tax and insurance premium of the property.
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