Question

An Escow is an arrangement that: ?

1) holds documents
2) holds funds
3) creates documents to affect a transfer of interest in a property
4) acts as an attorney
5) is responsible for guaranteeing funds

Answer 1

Escrow is an arrangement in which a neutral third party holds funds for two parties during a transaction, releasing them only when the terms are met. It simplifies payments for home insurance and property taxes by combining them into monthly payments.

Step-by-step explanation:

An escrow is a financial arrangement where a neutral third party holds and regulates payment of the funds required for two parties involved in a given transaction. It ensures that the money is safe and releases the funds only when all of the terms of an agreement are met. In the context of homebuying, escrow can be used to hold funds for homeowner's insurance and property taxes, streamlining these expenses into regular monthly payments.