An escrow setup for a cash out refinance is typically required to ensure that the funds from the refinancing are properly managed and disbursed for the following reasons:
- To pay off the existing mortgage on the property
- To cover any required inspections, appraisals, and closing costs
- To ensure that property taxes and insurance are paid
- To protect both the lender and the borrower during the closing process
The escrow company acts as a neutral third party to handle these financial transactions and ensure a smooth closing process.
This is a supplementary post to: What Is A Cash Out Refinance In Real Estate Investing?