What is an escrow advance?

An escrow advance is a payment made by a buyer or seller in addition to the scheduled escrow deposits to cover certain costs related to the transaction. These advances are typically required by the escrow company to cover any unforeseen expenses that may arise during the closing process, such as property taxes, insurance, or HOA fees.

Escrow advances are usually requested when the initial escrow deposit is not sufficient to cover all necessary expenses. The amount of the advance will be determined by the escrow company based on their estimates of the costs involved in the transaction.

It is important to note that the escrow advance is usually treated as a temporary loan and will be repaid to the buyer or seller once the closing process is complete. This means that the funds used for the advance will be deducted from the final settlement amount at the time of closing.

Overall, an escrow advance can be a helpful tool in ensuring that all costs related to a real estate transaction are covered in a timely manner and can help prevent any delays in the closing process.