What Is "Escrow" And How Does It Work?

If you've ever taken steps towards buying a house at the Lake of the Ozarks, you've undoubtedly heard the term "escrow" tossed around a few times. You're probably aware that escrow is an essential part of the home buying process and subsequent homeownership, but do you know what it really means? The team at Arrowhead Title, Inc. is here to help you make sense of this sometimes confusing subject.

What Is "Escrow"?

At its most basic definition, escrow is an account of funds that is being held by an independent third party. Once applicable instructions and conditions have been fulfilled, the third party then transfers the funds in the account to the designated recipient. According to this definition, escrow accounts could be used in any number of situations. In the world of real estate and title insurance, however, escrow deals predominantly with earnest money, closing costs, taxes, and insurance.

How Does Escrow Work?

Escrow is an integral part of the closing process in every real estate transaction. Your lender will work with escrow accounts to ensure that your property taxes and homeowner's insurance is managed correctly. Your Lake of the Ozarks title company will use escrow to see that your earnest money and your closing is handled appropriately.

Earnest Money
Every offer on every home includes a check for earnest money. This money is deposited into an escrow account by your escrow officer (such as your local title insurance agency at the Lake of the Ozarks) until closing, at which point the money will be applied towards the purchase of the home. 

When you buy a home at the Lake of the Ozarks, all of the money involved usually passes through the title company. The title company is responsible for managing the bank's money and the buyers' money, for paying the real estate agents' and the lender's commissions, and paying off any outstanding liens. The standard real estate contract contains the instructions and conditions for allocating these funds to the recipients.

After Closing
In some cases, a condition will not be met before the official closing date. For example, the seller may need to pay for a final repair on the house. When this happens, the title company will hold some money back in another escrow account until the final instructions have been carried out and all the conditions have been fulfilled.

How Important Is Escrow?

To put it simply, escrow is critically important to the real estate process. Because every single penny in a real estate transaction usually passes through your escrow agent or your title company before it can be delivered to the appropriate party, it is crucial that you work with a trustworthy company. At Arrowhead Title, Inc, we deal with several millions of dollars every single month. Our escrow accounts are strictly regulated through the state of Missouri and through our underwriter, Stewart Title. We take great care to ensure that every penny is accounted for and delivered into the intended recipients.

Arrowhead Title, Inc. Is Here For You!
Escrow can seem complicated and confusing, but when you work with the team at Arrowhead Title, Inc. you can rest assured that everything will be handled carefully and accurately. If you have questions about how the escrow process works, we invite you to sit down and discuss your concerns with one of our experienced team members. We would be happy to explain the process to you in more detail!

The Lake of the Ozarks' Most Trusted Title Company


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