Escrow refers to a financial account in which the funds are managed by an intermediary like a law firm or dedicated escrow company on behalf of the two parties committed to a dealing or transaction.

The neutral third party won’t release the funds until the deal is complete.

The use of escrow accounts is quite common in real estate dealings, but it’s a valid means of keeping money on hold under a neutral party for any transaction.

During a home buying process, the first time you will need to use the escrow account is when making the earnest money deposit to reflect your intent of purchasing to the seller. You can get that money back if the appraisal returns the home’s value lower than the sales price or the home inspection finds serious issues with the home.

If you purchase a home on loan, your mortgage lender will ask you to put some money into an escrow account for paying the homeowners’ insurance premiums and property taxes. The provider uses money from this fund to pay tax bills and insurance premiums on behalf of the homeowner. It ensures that the bills are paid on time.

Every mortgage provider will do an escrow analysis each year because the rates of the insurance premium and property taxes are not fixed. This analysis ensures there are adequate funds in the account for paying these bills over the next year. The lender will send you a statement after each yearly review. There could be a shortage (not enough funds to cover the expenses) or overage (extra funds than necessary) in the account.

Setting up an escrow account is mandatory in any real estate transaction.

An appraisal is simply an ‘official’ assessment of a property value. It is an integral part of a home-buying process since the mortgage lender expects the correct valuation of the property you will be purchasing.

When you apply for a loan for buying a house, the mortgage lender will require a report from the appraiser about the market price or a possible selling price of that house. These will be ordered by America Mortgages at the Processing Stage of your loan – on your behalf and will be the only time we will ask for any form of payment.

It’s a rough estimate that the lender uses to determine the mortgage rate. The principal or loan amount will be lower than the appraised value of the property. America Mortgages loans out 75% (for Foreign Nationals) to 90% (for U.S. citizens) of a home’s appraisal value.

The appraisal must be done by a person or an organization with the required licenses in that jurisdiction.

A licensed professional appraiser will work without any bias and make sure that the estimation is fair. When the lender requests the appraisal during the mortgage approval process, it will be randomly selected from a panel of reputable companies to ensure an unbiased opinion.

So, what features of the house matter to the appraiser? Some people have the misconception that eye-catching decoration and luxurious furniture increases the price. In fact, these things add value during other steps of home buying and selling, not in the appraisal process.

A home’s value will depend on its current condition, square footage, number of bedrooms, location, neighborhood, and a handful of other things. Appraisers will also note the views, which means overlooking a beach, lake, or the city. A property in a prime location or a prestigious neighborhood will qualify for a higher loan than those located in a less desirable area.

Normal appraisals range between $500-800 depending on State and location. If a lender requires a Rental Comparison, it may add $100-200 more.