Escrow: When you're closing on your new home, an escrow company is used to ensure the process will close properly and on time. Escrow companies hold money for "safe-keeping" in transactions between a buyer and seller. For example, in an Internet transaction, PayPal is the reliable third party that holds the buyer's cash, and then hands over the funds to the seller.
The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's contract are completed prior to the sale being finalized. This includes receiving funds and records, finishing required forms, and obtaining the release documents for any loans or liens that are to be cleared with the transaction, assuring you have a clean title to your place before the purchase price is fully paid.
Escrow holders want to obtain the following legal documents:
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
Upon finishing of all instructions of the escrow, closing can take place. All payments owed and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then secure the title to the house and the title insurance gets dispersed as agreed upon in the escrow instructions.
When closing is in it's last step, you'll make a payment to the escrow agent. As your real estate agent, I'll inform you of the acceptable way of paying.