Final answer:
The buyer's obligation to deposit closing funds that depends on the seller completing their part is known as a conditional requirement or contingency. Escrow is a third-party account where buyers can deposit funds to be released upon the fulfillment of specific conditions, and it also helps facilitate the payment of insurance and property taxes as part of the mortgage agreement.
Step-by-step explanation:
The obligation of a buyer to deposit closing funds that is contingent upon the seller's performance is typically referred to as a conditional requirement or contingency in a real estate transaction. In the context of homebuying, escrow is a related concept where money is held by a third party and released to the seller once certain conditions are met. For example, the purchase agreement may state that the buyer's obligation to deposit closing funds with an escrow agent is subject to the seller first completing agreed upon repairs or providing a clear title to the property. It's like a safeguard that ensures the buyer's and seller's respective obligations are fulfilled.
Understanding the role of a mortgage is another important aspect in homebuying. A down payment is typically required to secure a mortgage, with a common recommendation being 20% of the home's purchase price. If a home costs $100,000, a buyer would make a $20,000 down payment and obtain a mortgage for the remaining $80,000. Escrow accounts are also used by lenders to collect funds monthly from the homeowner to pay for property taxes and homeowner's insurance, adding convenience and ensuring these expenses are paid on time.