What does ‘In Escrow’ Mean?

"In escrow" refers to a real estate transaction stage where a neutral third party holds funds and documents related to the sale. This arrangement ensures that all conditions of the sale are met before the transaction is finalized. During escrow, the buyer's funds are held securely while the seller meets all the terms of the sale agreement, such as completing repairs or providing clear title. Once all conditions are satisfied, the escrow agent, through a title company, pays existing encumbrances, disburses the funds to the seller and transfers ownership to the buyer, ensuring a secure and fair process for both parties.

  • When you need to work on your credit. Maybe your credit score is just starting to recover, but you need more time to pay down debts for a couple of years. With rent-to-own, you could start investing in a home while you bring up your score.
  • You’re close, but not quite ready to secure a mortgage. You might have a good job with a significantly bigger salary, but you haven’t been there long enough for a lender to consider it a stable source of income. Or maybe you’re self-employed and you’re still building a reliable track record. Rent-to-own allows time to build personal wealth and financial credibility while working toward your homeownership goals.
  • When you know you’re going to buy when the lease expires. If you’re not ready to buy when the lease expires, then you will lose any rent credit, i.e. investment, you’ve put into the home.