Let's talk about "escrow". When you're closing on your new house, an escrow holder is used to make sure the process will close correctly and in a certain amount of time. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. An easy way to understand the concept of what an escrow company does is to compare it to PayPal for online purchases.
The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's agreement are met prior to the sale being finished. This includes getting funds and paperwork, finishing required forms, and getting the release documents for any loans or liens that were paid with the transaction, assuring you have a free title to your place before the final price is fully paid.
These are the documents that escrow holders usually look for:
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
You're ready to close when every step is finished in escrow process. All debts and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the property is then transferred to you as new homeowner and related title insurance is issued as noted in the escrow policy.
At the close of escrow, payments of funds are made in an acceptable form to the escrow. As your real estate professional, I'll inform you of the acceptable way of paying.