Who typically pays for real estate taxes, hazard insurance, and mortgage insurance?

In real estate transactions, it is common for the buyer to pay for real estate taxes, hazard insurance, and mortgage insurance, although these costs can sometimes be negotiated differently depending on the specifics of the deal. When the buyer sets up an escrow account, the expenses for real estate taxes and insurance premiums may be managed through this account.

Escrow disbursement refers to the arrangement where funds are held by a third party and disbursed as necessary to cover these expenses on behalf of the buyer. This process ensures that payments are made on time and that the buyer remains compliant with their obligations, such as ensuring hazard insurance is in place and real estate taxes are paid to avoid penalties.

In doing so, the escrow account simplifies the payment process, as it consolidates these costs and allows for budgeting and timely payments, making it easier for buyers to manage their financial obligations associated with property ownership. This highlights the role of escrow in facilitating the payment of applicable costs in real estate transactions.