What is Escrow?

The borrower and the lender are at two ends , they need to meet at some point and this is the escrow.Some are of the view that escrow is unnecessary.But the escrow helps both of them. Let us know how.

(PRWEB) February 9, 2005 -- An escrow is a third party facility which makes the process of paying yearly obligations convenient .The escrow account is agreed on by both the lender and the borrower. Whenever you make your monthly payments you pay an extra agreed on amount apart from the interest and principal to the escrow account. This money is reserved and the lender takes the interest on the same. At the year end you need to pay insurance and property taxes in bulk, which can be paid out from the accumulated funds.

Thus it allows for a healthy contract period and avoids any disagreement between the two main parties. The escrow basically collects, holds and disburses the funds paid by the borrower. The escrow account comes into force with the first monthly payment and finishes when there is a foreclosure.

While availing of the services of an escrow make sure that the agent is licensed and regulated. An escrow benefits both the borrower and the lender. The borrower entrusts the funds with the agent for timely disbursement. The lender holds the deed as long as his need is not met and then he returns the rest to the borrower. The transactions are made faster and convenient due to the escrow. An escrow is the contact point between the two parties. The escrow officer remains neutral throughout the transaction and this helps avoid the bias usually on the lender side.

For a smooth mortgage extra payments transaction, keep an escrow handy.

For further details on escrow you can log onto:
http://www.mortgagefit.com
http://www.mortgagefit.com/escrow.html

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