First, a little about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is brought on to assure your property closes on time and the money exchanging part of closing goes smoothly. A property is said to be in escrow when in the closing transaction, funds is held by a third party on behalf of a buyer and a seller when the transaction is taking place. An easy way to think of what an escrow company does is to compare it to PayPal for Internet purchases.
The escrow holder makes sure that the terms and conditions of the agreement between the two parties are performed in preparation of the sale being finished.
These are the documents that escrow holders usually compile:
- 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
- Loan documents
- Tax statements
Closing on the home happens when the steps of the escrow are done. All expenses like title insurance, inspections and real estate commissions are paid. Title to the property is then given to you as now current homeowner and related title insurance is issued as noted in the escrow instructions.
When closing is completed, you'll make a payment to the escrow holder. As your real estate professional, I'll let you know what is an acceptable form of payment.