Escrow Services: Purpose, Advantages, and Disadvantages


Purchasing a new house and settling down can be difficult and sometimes people are underprepared. Buying a house requires several stages of requirements from offer to home inspection and mortgage. Escrow Services are legal arrangements in which a third party holds big sums of money or assets for a period of time until a specific criterion is fulfilled. Streamline escrow software provides a platform for people to avail of escrow services without worrying about their money and reduce risk and move forward with confidence.

What is an Escrow?

Escrow is a type of insurance that’s utilized in real estate transactions to safeguard both the sellers and buyers during the home-buying process. An escrow account will keep funds for tax and property owner’s insurance during the duration of the mortgage.

Escrow services are financial arrangements where the 2 parties hire the services of any third party who is not either the buyer or seller for the purpose of handling money, documents, or other assets for them until the transaction is completed. That third party, referred to as that of an escrow provider, aids in the transaction’s safety by safeguarding the seller and buyer’s assets till both parties have fulfilled their contractual duties.

Purpose of Escrow Accounts

Escrow is commonly utilized in real estate for 2 purposes:

  1. To safeguard the buyer’s good faith deposit, ensuring that the funds are delivered to the correct party in accordance with the terms of the sale.
  2. To keep an owner’s money for taxes and insurance in one place.

Types of Escrow Accounts

Escrow accounts are divided into two categories based on the functions they fulfill:

  1. used for the duration of the loan.
  2. Used for the home buying process.

Streamline escrow software allows the creation of escrow accounts for both purposes.

Home Buying Escrow Accounts

A good faith deposit is commonly included in a purchase agreement when purchasing a home. If an agreement falls through owing to the buyer’s fault, the seller is usually entitled to the money. The deposit will be used for the buyer’s down payment if the house purchase goes through. The deposit is held in the escrow account until the transaction is complete.

Advantages and Disadvantages of Escrow Services


  1. Escrow offers protection during a transaction, particularly one involving real estate.
  2. With high stake items, escrow services can be beneficial both for the seller and the buyer.
  3. Allows for the paying of taxes and insurance monthly thereby avoiding the payment at once.


  1. In case of payment of insurance and taxes mortgage payments shall be higher.
  2. Calculations for the amount of taxes may be inaccurate in some instances.
  3. Escrow costs for internet transactions may be higher than those charged by other services such as PayPal.


Escrow services can be availed by creating escrow accounts on platforms like Streamline escrow software.Escrow services are important for a variety of purposes other than home transactions.The buyer can undertake due diligence on a potential transaction by putting the funds in escrow. Escrow accounts also provide assurance to the seller that the buyer will be able to complete the transaction.