An escrow deposit is the deposit that is required to be made per the terms of the contract. This amount is negotiated with the terms of your offer. This indicates you’re serious about buying their home. Once the deposit is in, the money cannot be touched or moved without a written consent from both the seller and buyer. The escrow funds are held by a third party like a title company. When you close the money, deposit is applied to the balance of the down payment.
An escrow will come in when two parties are in the process of completing a transaction and if there is uncertainty over whether one party or another will be able to fulfill their obligations. Having a escrow deposit on a escrow account is beneficial. The deposited money gets held to make sure the whole transaction process is running smoothly.
During the transaction process, the escrow officer or title company representative will hold all important documents and deposits while the seller and buyer work the details. Then the escrow officer will make sure the closing goes smoothly and that everyone gets paid what they’re owed. Having an escrow account would most likely be necessary during the process of a transaction payment with a home.
All funds are held in the escrow until they are needed to pay one or more of the expenses. All money that is placed into your escrow deposit or account will all be eventually credited to you at closing. It is important to understand all the contingencies of your sales contract as you could lose the escrow deposit if you do not meet the terms of the contract.