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Dummies guide to Escrow? Stupid ? of the Day


Valkyrine
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A friend of mine is currently trying to purchase a modular home to be built in a "park" on her existing space.

She has not been approved for a loan as of yet; however, she has already paid several hundered dollars into escrow.

So what exactly is escrow, and why is she paying it before she even has a loan??

Thanks for any help you can give...

Val

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Escrow is an account held for a borrower at a title company or a attny office.

It is like a deposit, it is her money, and is used to pay down payments etc. Depending on the wording of the contract, she may or may not get the money back if the loan does not go through.

Having a home built on property that is not hers becomes a unique situation, and normally requires that she secure a lease on the property for 5+ years after the loan is paid for, ie if it is a 30 year loan, it would need to be for 35 years.

Hope that helps.

Charles

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