Real estate transactions require a certain level of trust. You want to keep these large sums of money protected. That’s why escrow accounts play a vital role in real estate investments. However, a real estate investor may need various types of escrow services. This post will cover the types of escrow services available in Tennessee real estate.
Tennessee Real Estate Market Watch
As of June 2023, the average sale price of a home in Tennessee was $304,344. However, real estate trends can change quickly. If you need title services when buying or selling a home in Tennessee, click here to contact our team.
Types of Escrow Services for Real Estate Transactions
Purchase Escrow
A purchase escrow is the most common type of escrow people encounter in real estate transactions. When a buyer enters a purchase agreement with a seller, they must put earnest money down. Earnest money is a sign of serious intent to follow through on the purchase. The buyer deposits the money with an escrow service to keep the money safe while they perform due diligence.
Mortgage Escrow
With a mortgage escrow, the account is part of an agreement between the borrower and the lender. The lender might want to ensure the borrower pays the property’s annual costs. These costs may include homeowner’s insurance, property taxes, or HOA fees. The mortgage escrow account allows the borrower to make monthly payments toward these annual costs. A mortgage escrow agent will also use the funds to pay the costs on time.
Refinance Escrow
Escrow accounts may also be helpful if you refinance your mortgage. Refinancing involves getting a new mortgage and using the funds to pay the current mortgage. When the lender approves the new mortgage, they can send the funds to the escrow account. The escrow agent will hold the funds until all parties meet their obligations. Once clear, the escrow agent can transfer funds to pay the old mortgage. They will transfer funds to the borrower’s bank account if it is a cash-out refinance.
Construction Escrow
As an investor, you might buy a property to develop it or renovate it. You should consider releasing the money to contractors in stages if the work is extensive. However, the contractors will want assurance that the money will be there to pay for the work. In this situation, you could use a construction escrow. The investor would put the money for the project in an escrow account. As the contractors meet various milestones, the escrow agent can release funds to pay for the work.
Title Services in Tennessee
Do you need escrow services for a real estate transaction? Click here to contact the Title Group of Tennessee. We offer complete title services for closings that are reliable and secure.
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