Escrow: To finish the sale of a home, a neutral, third party (the escrow agent) is employed to assure the process will close correctly and on time. A property is said to be in escrow when in the closing process, payment is held by a third party on behalf of a buyer and a seller when the exchange of money takes place. PayPal is a simple way to think of an escrow company.
Clearing the final hurdles like taking in funds, completing forms, securing the documents for loans and liens, and making sure you get a clear title to the property before your purchase gets finalized are all part of the job of the escrow agent.
The documents the escrow company may secure include:
- 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
Closing on the property happens when all of the procedures of the escrow are complete. All outstanding payments and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then receive the title to the home and the title insurance gets issued as agreed upon in the escrow instructions.
When closing is finished, you'll submit a payment to the escrow company. You'll know when it's time to submit the form of payment.