An escrow account is a special account set up by a third party, often a title company or an attorney, to hold funds and documents on behalf of the buyer and seller during a real estate transaction. The escrow account acts as a neutral party that helps facilitate the transfer of funds and documents between the buyer, seller, and helps to ensure a smooth and secure transaction.
What is the difference between the principal and interest on a mortgage?
The principle is the amount of money borrowed to buy the property/home. It’s the initial loan amount.
Interest is the cost paid to borrow the money from the lender. It’s calculated as a percentage of the principal and is added to the monthly mortgage payment. Each month, when a mortgage payment is made, a portion goes toward paying off the principal and another portion goes toward paying the interest.
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