Escrow is one of those phrases the professionals use to mystify consumers. It is a fluid term with several meanings. The most common are:
- A generic term for the entire closing process
- An agreement to hold funds/documents until certain events have occurred (e.g. we will hold funds “in escrow” until the Seller removes the junk car from the backyard.)
- an agreement to hold deposit for a specific use (e.g. we will “escrow” $150/month for payment of future taxes.)
Don’t let your eyes glaze over when people start throwing around the word “escrow” — look them straight in the eye and ask them what they mean.