Escrow during the sale
From contract to closing, the title company holds your earnest money in an escrow account. At closing it collects the rest of the funds, pays the seller, agents and lenders, and records the deed, all according to the contract.
Your mortgage escrow account
Many lenders collect part of your property taxes and homeowners insurance with each monthly payment and pay those bills for you. The account is funded at closing with an initial deposit, and it's reviewed each year.
Getting escrow money back
If your mortgage escrow account collects more than it needs, the surplus is refunded after the annual review. When you sell or refinance, the old lender refunds the remaining balance after the loan is paid off.
Common questions
Is having an escrow account good or bad?
It smooths out large tax and insurance bills into monthly amounts. Some borrowers prefer to pay those themselves if their lender allows it.
Do I pay escrow every month?
If your loan has an escrow account, yes, it's part of your monthly payment.
How long does escrow take on a purchase?
Usually as long as it takes to close, often around 30 days with a mortgage, less for cash.