Escrow: An escrow agent is hired to assure your property closes on time and the process goes smoothly. A house 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 exchange of money takes place. For example, in an online transaction, PayPal is the neutral third party that obtains the buyer's funds, and then sends the payment to the seller.
The escrow agent makes sure that all terms and conditions of the seller's and buyer's agreement are performed prior to the sale being finalized. This includes receiving funds and certificates, filling out required forms, and getting the release documents for any loans or liens that were paid off with the transaction, assuring you have a free title to your home before the final price is fully paid.
The pieces of paperwork the escrow company may secure include:
- 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
- Terms of sale and any seller-assisted financing
You're ready to close when every step is complete in escrow process. All debts and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then secure the title to the property and the title insurance gets issued as stated in the escrow instructions.
At the close of escrow, in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.