When you start the procedure of purchasing a home, you have to open an escrow account. An escrow account keeps your money safe throughout the entire home-buying process all the way up to closing. A lot of times there is extra money left over in the escrow account after the home-buying process is complete. If you've ever wondered what happens to that money, you’ve come to the right place.
The money that's left over in an escrow account is usually redirected to other things that the buyer has to pay for. This can include property taxes, and even the mortgage itself. There are some lenders that will use the access money in your escrow account to cover the cost of your mortgage should you fall too far behind.
It's important to remember that the money that you have in escrow still belongs to you. No one else has access to it, except for the escrow agent in charge of your account. This is to keep everyone honest, and to keep you from losing money. Legally you should be getting an analysis of your escrow every year. This will let you know if there is extra, or if you have a shortage of money.
Understanding the escrow process is an important part of buying or selling a house. Talk to a local escrow agent to find out everything you need to know.