Escrow

What is escrow?

Escrow keeps either side from holding the other’s money. When your offer is accepted, your earnest money deposit goes to the escrow agent named in the contract, who releases it only as the contract allows: credited to you at closing, returned if you cancel inside a contingency, or paid to the seller if the contract says so.

At closing the same agent collects the buyer’s funds and the loan money, pays off the seller’s mortgage and the closing costs, and releases the deed for recording. Our buyer closing costs calculator shows every line that moves through escrow.

What does "in escrow" mean?

A house that is “in escrow” is under contract: buyer and seller have signed, the deposit is held, and the sale is working through inspections, the appraisal and the loan toward closing. In Florida listings you will more often see the same stage shown as pending or as active with contract.

How does an escrow account work after closing?

Part of each monthly mortgage payment goes into the escrow account, and the servicer pays the tax and insurance bills when they come due. At closing you fund the account’s first deposit, which is why prepaid taxes and insurance show up in your cash to close.

Federal rules (RESPA’s Regulation X, 12 CFR 1024.17) let the servicer keep a cushion of no more than one-sixth of the year’s estimated escrow payments, about two months, and require an escrow analysis every year. If your taxes or insurance went up, the analysis shows a shortage and your payment rises. Model it with the escrow shortage calculator and see why Florida escrow payments are going up.

Escrow and Florida property taxes

Florida tax bills are payable from November 1 with a 4% discount for paying in November, stepping down to 1% in February, and are due by March 31. Ask your servicer when it pays your bill. See when property taxes are due in Florida.

Next step

See homes for sale in Florida and Georgia · Talk to a buyer’s agent.