When it comes to buying a new home, especially if it’s your first time, the process can be confusing, to the say the least. One particular stumbling stone that happens to trip up many new homebuyers is what is an escrow account and what does an escrow company do? Simply put, escrow is sum of money from a transaction, typically real estate that is held by a 3rd party or an escrow company, until certain conditions are met. In many senses an escrow account is much like a trust fund.
Another way to look at escrow that you might be more familiar with is a security deposit on your apartment, or a rental vehicle. You pay extra when moving in, typically an extra month's rent, which will cover the cost of repairs when you move out. If no repairs are needed or the cost of repairs is less than your deposit, the rental agency will return the money to you at the end of your lease.
HUD and Home Loans
HUD homes are residential homes that are owned by the Department of Housing Urban Development. The homes are acquired by HUD due to foreclosure on FHA insured mortgage. HUD then attempts to resell the property at a lower price to help recover the cost of the foreclosure claim. In some instances, a HUD home needs to undergo some minor repairs before the Federal Housing Administration will underwrite the loan. In this instance, the lender will approve a HUD repair escrow, allowing the buyer to close on the home and make the repairs necessary. When the repairs are satisfactory, the escrow can be disbursed back to the homebuyer.
The Rise of Escrow
An escrow company’s services, at a time, were usually reserved for high value purchases such as real estate, vehicles and business or pieces of personal property. Internet auctions such as eBay, or transactions from person to person all use escrow. With internet escrow companies offering relatively inexpensive services, even low price transactions are seeing some benefit from using escrow.
Escrow and the Sunshine State
California is a truly amazing place. With the way that everything shifts and changes at the speed that it does, homebuyers really need to be on their toes. When it comes to property closing, southern California has a lot going for it. When setting up an escrow account, California residents would do well to find a company with a well-established reputation. While there are quite a significant number to choose from, only one escrow company in California is the right one for you.
Another way to look at escrow that you might be more familiar with is a security deposit on your apartment, or a rental vehicle. You pay extra when moving in, typically an extra month's rent, which will cover the cost of repairs when you move out. If no repairs are needed or the cost of repairs is less than your deposit, the rental agency will return the money to you at the end of your lease.
HUD and Home Loans
HUD homes are residential homes that are owned by the Department of Housing Urban Development. The homes are acquired by HUD due to foreclosure on FHA insured mortgage. HUD then attempts to resell the property at a lower price to help recover the cost of the foreclosure claim. In some instances, a HUD home needs to undergo some minor repairs before the Federal Housing Administration will underwrite the loan. In this instance, the lender will approve a HUD repair escrow, allowing the buyer to close on the home and make the repairs necessary. When the repairs are satisfactory, the escrow can be disbursed back to the homebuyer.
The Rise of Escrow
An escrow company’s services, at a time, were usually reserved for high value purchases such as real estate, vehicles and business or pieces of personal property. Internet auctions such as eBay, or transactions from person to person all use escrow. With internet escrow companies offering relatively inexpensive services, even low price transactions are seeing some benefit from using escrow.
Escrow and the Sunshine State
California is a truly amazing place. With the way that everything shifts and changes at the speed that it does, homebuyers really need to be on their toes. When it comes to property closing, southern California has a lot going for it. When setting up an escrow account, California residents would do well to find a company with a well-established reputation. While there are quite a significant number to choose from, only one escrow company in California is the right one for you.
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