EMBRY GROUP AT CRUE REALTY | BUYER'S GUIDE
Embry Group at Crue Realty | Huntsville, AL
"Escrow" gets mentioned a lot when you buy a home, and it actually means two different things. During your purchase, it's money held by a neutral party until the sale closes. After you own the home, it's usually an account tied to your mortgage that pays your property taxes and homeowners insurance. Here's the plain-English version of both.
Escrow #1: During Your Purchase
While you're under contract, your earnest money (the deposit that shows the seller you're serious) is held in a trust or escrow account by a neutral party until every condition of the sale is met. Your purchase contract spells out who holds it. In Alabama, closings are handled by a closing attorney or title company.
Once financing is finalized, inspections are resolved, and everyone signs at closing, that money is credited toward your purchase. This kind of escrow is temporary. It ends at closing.
Escrow #2: After You Own the Home
After closing, many lenders set up an ongoing escrow account tied to your mortgage. Part of each monthly payment goes into it, and the lender uses it to pay your property taxes and homeowners insurance when they're due. Instead of saving up for big once-a-year bills, you pay a little each month.
Why Your Payment Might Change
Your lender reviews the account periodically, usually once a year in what's called an escrow analysis. If your property taxes or insurance premium went up or down, your monthly payment adjusts to match. That's normal and doesn't mean anything went wrong.
Can You Skip It?
Some buyers, often those with larger down payments, can ask to waive the escrow account and pay taxes and insurance on their own. It depends on your lender and loan type, so ask your loan officer directly.
Where Escrow Fits in Your Cash to Close
At closing, you'll usually make an initial deposit into the new escrow account along with your other costs. For the full picture, read How Much Cash Do You Need to Buy a House in Huntsville?
Want a clear plan from pre-approval to closing day? Our free Buyer's Guide walks through every step. Get the Buyer's Guide here.
Ready to Make a Move?
The Embry Group at Crue Realty has helped hundreds of buyers, sellers, and investors navigate the North Alabama market. We're here to help you do the same.
Call or text: (256) 690-0340
Email: [email protected] | Website: embrygrouprealestate.com
Embry Group at Crue Realty | Huntsville, AL | (256) 690-0340 | [email protected]
