If you’re buying a house for the first time, the purchasing process may be unfamiliar. One essential facet of home purchases is escrow. Here’s what you need to know about it and how escrow benefits buyers.

Understanding Escrow

How Escrow Works

When a property is in escrow during a real estate transaction, an independent third party—neither the buyer nor seller—holds something of value until a condition of sale is met. A buyer’s earnest money and the seller’s deed to a property may be held in escrow. An escrow agent safeguards these deposits. A title company or attorney may serve as escrow agents. They deposit assets into an escrow account, separate from their operating and personal accounts.   

How Escrow Helps Home Buyers

The escrow agent for your transaction protects your interests and those of the seller. They’re responsible for keeping escrow assets safe  and delivering them to an organization or person at the proper time, including at the closing. If the seller fails to comply with a condition of the purchase contract, for example, the escrow agent would be responsible for returning the earnest money that you deposited to show your good faith in completing a transaction to buy a home.  

If you obtain a mortgage when buying a house, the lender may require you to deposit money each month in an escrow account to cover real estate taxes and insurance premiums. As a buyer, you benefit by having the money for these expenses set aside in advance of due dates. Your mortgage company uses funds deposited in escrow to pay taxes and insurance premiums until your mortgage is fully paid.

Buying a house for the first time is an exciting but complicated experience. For over 40 years, the residents of Hamilton County, TN, have trusted Chattanooga Title as their escrow agent and title insurer to streamline real estate transactions. They offer proven protections to safeguard each client’s interests. When you need a professional escrow and closing agent, call (423) 756-3057 to speak with a member of their team, or visit them online now to learn more about their services.