An escrow account plays an important part in mortgage transactions. Essentially, escrow is considered to be money, securities or property that is handled by a neutral third party. For the most part, escrow is generally used during real estate transactions. The neutral third party managing the account is considered an escrow agent. The escrow agent holds on to assets during the time that the two parties are working through finalizing a deal. An escrow agent is generally a real estate agent, real estate attorney or escrow company. When a buyer decides to make an offer on a particular property, the buyer is expected to back up the offer by putting up some cash once the seller decides to accept the buyers offer. When a buyer sends an offer to purchase a piece of property, the offer also states the buyer’s intent to purchase the property after certain conditions being met. From a seller’s perspective, some of these conditions include the buyer being able to secure a mortgage loan. In the conditions it may state that there may be a delay if the buyer must first sell an existing property to pay off the current mortgage before obtaining another loan. Other conditions may be that the buyer insists that certain repairs must be completed first. Once both parties agree on the conditions outlined, then the cash is given to an escrow agent and placed in a separate account. If the conditions required are met then the money will go to the seller. However, if the conditions haven’t been met then the money goes back to the buyer. The neutral third party is necessary to help prevent any disagreements and lawsuit on who will receive the escrow money. Also keep in mind that there is an escrow fee for the services of the escrow agent. In some cases, the escrow money is used by mortgage companies to ensure proper payments of property tax and homeowner’s insurance. This is when 1/12 of the cost of annual property tax and homeowner’s insurance premiums are added on to the monthly mortgage payment. Again, this is to ensure that those two important aspects to buying a home get paid. If a homeowner fails to pay the annual property tax then the government has the right to seize the home to sell in order to pay off the taxes owed. This may leave the mortgage company in a tight spot. Therefore the escrow money is used to ensure that the taxes are paid and the mortgage company isn’t out thousands of dollars. Mortgage companies are also concerned with homeowner’s Category:Home › Other • Pomegranates: A newly discovered superfood • Where did the joke why did the chicken cross the road come from and why is it funny? • Can mothers diagnosed with bipolar disorder make good parents? • Spiritual evolution of human consciousness • Tips for getting a college basketball scholarship • Living with Pseudotumor cerebri (PTC) • Caring for the caregiver • Technologys impact on society