[aahome] Why Use Escrow In Real Estate Investing?

tag:blogger.com,1999:blog-8915258476916414794.post-73217475256002078032008-05-16T00:13:00.001-07:002008-05-16T00:13:33.338-07:00[aahome] Why Use Escrow In Real Estate Investing?This is a free-reprint article written by: Joel Teo================== IMPORTANT - Publication/Reprint Terms- You have permission to publish this article electronically in free-only publications such as a website or an ezine as long as the bylines are included.- You are not allowed to use this article for commercial purposes. The article should only be reprinted in a publicly accessible website and not in a members-only commercial site. - You are not allowed to post/reprint this article in any sites/publications that contains or supports hate, violence, porn and warez or any indecent and illegal sites/publications. - You are not allowed to use this article in UCE (Unsolicited Commercial Email) or SPAM. 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Isnare.com does NOT own this article, please respect the author's copyright and this publication/reprint terms. If you do not agree to any of these terms, please do not reprint or publish this article. ==================Title: Why Use Escrow In Real Estate Investing? Author: Joel Teo Word Count: 582 URL: <a href="http://www.isnare.com/?aid=166779&ca=Real+Estate">http://www.isnare.com/?aid=166779&ca=Real+Estate</a> Format: 64cpl Author Contact: <a href="http://www.isnare.com/eta.php?aid=166779">http://www.isnare.com/eta.php?aid=166779</a>Easy Publish Tool: <a href="http://www.isnare.com/html.php?aid=166779">http://www.isnare.com/html.php?aid=166779</a> ================== ARTICLE START ================== What is escrow? Escrow is when two or more people or parties enter into a legal agreement that provides for the placement with a third party for safekeeping certain properties, instruments, or assets, and the release of these properties, instruments, or assets is contingent on the performance or fulfillment of certain conditions or acts. An escrow account is an account that is specifically set up only to disburse funds for a specific reason or use. In real estate investing and other transactions of this type, escrow accounts are normally used to hold funds that are intended for insurance premiums and real estate taxes that have been paid in advance and can only be released for these intended purposes. In real estate, escrow collections are amounts that have been collected from the borrower by the loan provider to be put into escrow for specific expenses. These expenses are hazard homeowners insurance, property taxes, mortgage insurance, and any other amounts that are paid on a annual or semi-annual basis. When money is released from an escrow account for the intended use, this is called an escrow disbursement. Using escrow for these types of expenses protects both the borrower and the lender. The borrower gets peace of mind knowing that the lender can only access the funds for the intended purpose. This guarantees that the lender will not take the monthly payments for these expenses and not apply them towards the intended use. The lender can rest easy knowing that the borrower can not remove the funds or spend the money on other things. Both parties have an assurance that these bills are being met. The lender may be especially interested in the insurance payments, because if something happens to the house and the insurance premiums have not been met, then the lender stands to loose a lot. If the property taxes are not paid, the property may be seized for back taxes, costing either the lender or borrower more money. This is why it is important to use escrow for monthly payments of this type. Certain expenses are paid every year or twice a year. Most of the time borrowers pay one sixth or one twelfth of these expenses on a monthly basis, and these funds are put into escrow until the expense comes due. Always beware of anyone who refuses to put these payments into an escrow account. Any legitimate real estate investor or lender will be more than willing to put these amounts into escrow, and if they seem uncomfortable with this that should be a red flag concerning at least their business practices, if not their business ethics. An escrow account should specify that it is an escrow account. The funds in an escrow account always belong to the borrower until the expense the account is set up for is paid. It is important to use escrow so that both parties are protected, and the funds are held for specific expenses. This protects against fraud, as well as guaranteeing that certain expenses like property taxes and insurance payments are made on time to protect the lender's interest in the property. The home buyer has the security of knowing that the money will go exactly where it should, and can not be removed for any other reason. Copyright © 2007 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author's information with live links only.) About The Author: Joel Teo writes on various financial topics including Las Vegas Real Estate. Learn more about Las Vegas Real Estate Investing at <a href="http://www.realestateinvestment101.info">http://www.realestateinvestment101.info</a>Please use the HTML version of this article at: <a href="http://www.isnare.com/html.php?aid=166779">http://www.isnare.com/html.php?aid=166779</a> ================== ARTICLE END ==================For more free-reprint articles by Joel Teo please visit: <a href="http://www.isnare.com/?s=author&a=Joel+Teo">http://www.isnare.com/?s=author&a=Joel+Teo</a> ------------------------------------######################################################## Looking For Quality Content?The Syndicator provides free, quality syndicated articles for your website that are automatically updated each week.Syndication feeds include:Business/Sales Internet Marketing/Promotion Web Design/Development Biz Tips Web Design Tips Home & Family Matters Dinner Ideas Health & Fitness Horoscopes AngelVoice Headlines and more...<a href="http://www.web-source.net/syndicator.htm">http://www.web-source.net/syndicator.htm</a> ######################################################## Post Articles: mailto:aahome@yahoogroups.com Subscribe: mailto:aahome-subscribe@yahoogroups.com Unsubscribe: mailto:aahome-unsubscribe@yahoogroups.com Change subscription: <a href="http://groups.yahoo.com/group/aahome">http://groups.yahoo.com/group/aahome</a> List owner: mailto:aahome-owner@yahoogroups.comYahoo! 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