Escrow is a neutral third party that holds funds & documents until all conditions are met, protecting both buyer & seller. Your earnest money goes into escrow (not to the seller) and applies at closing. The process runs ~30–45 days, matching the mortgage timeline.
What escrow is
In a home purchase, the buyer needs assurance the seller can actually deliver clear ownership, and the seller needs assurance the buyer's money is real. Escrow solves both: a neutral escrow holder takes in the funds and documents from each side and only releases them when every condition in the contract is satisfied. Nobody has to trust the other party — they both trust the neutral middle.
The escrow process, step by step
Open escrow
After offer acceptance, a neutral escrow holder opens escrow.
Deposit earnest money
Your good-faith deposit goes into escrow — held safely, not paid to the seller.
Complete contingencies
Inspection, appraisal, loan approval & title review; remove contingencies as satisfied.
Sign & fund
Sign closing docs; lender wires loan funds + your cash to close into escrow.
Record & close
Deed records, ownership transfers, escrow disburses, you get keys.
Earnest money & impound accounts
| Term | What it means |
|---|---|
| Earnest money | Good-faith deposit held in escrow, applied to down payment/closing at close |
| Impound / escrow account | Ongoing account after closing that pays your property taxes & insurance with your payment |
| Escrow holder | Neutral company managing the transaction for both parties |
Escrow FAQs
What is escrow?
A neutral third party holding funds & docs until all conditions are met.
What's earnest money?
Good-faith deposit held in escrow, applied at closing — not paid to seller.
What's an impound account?
Ongoing account paying your taxes & insurance with your payment after closing.
How long does escrow take?
~30–45 days, matching the mortgage timeline.
Who picks the escrow company?
Negotiated between buyer & seller; the holder is neutral.
Reviewed by the licensing team at Save Financial, a California-licensed mortgage brokerage (NMLS #377740, DRE #01875766) founded in 2009 and serving all 58 counties.