What are escrow disbursements used for?

Escrow disbursements are used to manage the funds held in escrow for various obligations related to a property. One of the primary purposes of these disbursements is to cover property taxes and insurance expenses. When a buyer places money into an escrow account, it is often allocated for the payment of recurring costs such as property taxes and homeowners insurance premiums. This helps ensure that these important obligations are met promptly and keeps the property compliant with local laws and regulations.

The context of the other options helps clarify why they are not the best answers. While real estate commissions are typically paid at closing, they are often dealt with directly between the buyers, sellers, and agents, rather than through escrow disbursements for ongoing property costs. Buyer financing refers to the loans taken out by buyers to purchase a property and involves different handling procedures than those managed in escrow. Similarly, paying off existing liens, which may occur at the closing of a property sale, is typically executed through other means and is not a primary function of escrow disbursements designated for regular ongoing costs like property taxes and insurance.