Simple Explanation Of Housing Escrow Insurance?

[WizardHat]

What is the name of your state (only U.S. law)?

Kansas

I've been looking at buying a house for the last year or so, and I think I've finally got enough ducks in a row to go hunting. One of the things I've been looking at is HUD housing, and I was looking at information in a brochure when I came across this line describing insurance types:

"IE - Insured with Escrow Property, if 203b FHA financing is used, an escrow is setup at closing and released upon repairs being completed."

I thought I knew what escrow was but I guess not; can someone explain the above in easy-to-follow terms? Maybe with a practical example?

 

[HomeGuru]

What is the name of your state (only U.S. law)?

Kansas

I've been looking at buying a house for the last year or so, and I think I've finally got enough ducks in a row to go hunting. One of the things I've been looking at is HUD housing, and I was looking at information in a brochure when I came across this line describing insurance types:

"IE - Insured with Escrow Property, if 203b FHA financing is used, an escrow is setup at closing and released upon repairs being completed."

I thought I knew what escrow was but I guess not; can someone explain the above in easy-to-follow terms? Maybe with a practical example?

**A: you are confusing escrow with the type of financing of the HUD 203B program. If you already know what escrow is, then the HUD plan is a program where financing is given to buy a fixer up property and some of the monies given are for repairs to be made. Escrow hold the repair funds and pays to each contractor when the repairs are completed.

 

[WizardHat]

Am I then correct in assuming that if I went with a house like this, I would never actually have to handle that set-aside money myself? I just tell the contractor to bill the appropriate government agency? Or do I have to take the bill and submit it myself to the holder of the money in escrow?