What is an Escrow account and how does one go about opening and closing this type of account?

What is an Escrow account and how does one go about opening and closing this type of account?

An Escrow Account is an account in which funds, held by a third-party on behalf of transacting parties, are accumulated for specific disbursements.

 

An escrow account can be opened at any one of the major commercial banks.

 

This is usually a temporary account, as it operates until the completion of a transaction process, which is implemented after all the conditions between the borrow and the lender are settled.

 

In terms of a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, and is obligated to pay back or repay an equal amount of money to the lender at a later time.