Escrow accounts are a type of savings account, in which money is kept to pay property taxes and insurance. When working with lenders like Stephen R Buzzi, they will open the account for you and explain how the whole system works. Furthermore, if you keep up with your agreed payments for a set period of time, you may be excused from having to make further payments into the escrow. It is also possible that you have an escrow account because that was simply part of your agreement. In that case, it will remain in place until the seller has fulfilled all their obligations. They buyer will continue to fund the account, and the money collected in it is eventually transferred to the buyer through the agent, like Steve Buzzi.
Do You Need an Escrow Account?
Escrow accounts are in place for the protection of the lender above all else. Should, for instance, your property be destroyed in a natural disaster, they will have no more collateral against the loan they provided you with. If you had insurance in place, they will not lose out. Similarly, if the state takes your property away because you didn’t pay your taxes, the lender would lose out as well. Hence, if you have an escrow, the two main dangers for lenders are mitigated.
What Are Escrow Agents?
Most of the time, lenders will employ escrow agents directly. Other times, they will ask a third party to come in. Either way, this agent implements the deal, making sure that the buyer funds the account appropriately and that the seller receives those funds as and when needed.
What about Online Escrow Services?
We live in a digital age, so it will come as no surprise that escrow accounts can now also be managed online. Indeed, entire online escrow services have started to appear. These are basically third party agents that enable the buyer and the seller to complete all their transactions digitally. This can be important when there is a wide geographical distance between the two parties, in which case the online agent is the perfect intermediary.
Some Guidelines to Be Aware of
Different authorities across the country have put rules and guidelines in place for the management of escrow accounts. Additionally, they are governed by the Real Estate Settlement Procedures Act, which puts a limit on how much can be placed into escrow. One of the rules in this Act is that there has to be one day every year on which the amount in the account is less than 1/6 of the value of the insurance premiums that are owed.
If you work with an escrow account for any transaction or for your mortgage, then you must consider how you will fund it on time as well. This can be quite complex and difficult to understand, which is why the assistance of people like Stephen Buzzi is so important. As consultants, they will help you to understand your different options, ensuring your account is also beneficial to you.