Escrow is a financial account held by a third party on behalf of two other parties engaged in a transaction. The money is held until certain terms of the agreement — such as buying a home — are finalized.
With real estate deals, you’ll encounter options to use escrow at two points — once when you’re buying the home and again with your mortgage payments. When deciding to use escrow for either of these transactions, it’s important to know how it can protect you and what the downsides are.
