First, a little about "escrow". To close the sale of a house, a neutral, third party (the escrow agent) is engaged to assure the transaction will close appropriately and on time. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in a Web purchase, PayPal is the neutral third party that holds the buyer's payment, and then hands over the funds to the seller.
Settling the last details like taking in funds, finishing forms, getting the documents for loans and liens, and making sure you get a spotless title to the house before your purchase gets finalized are all parts of closing in which an escrow holder is useful.
Escrow holders want to obtain the following forms:
- 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 home takes place when all of the procedures of the escrow are finished. All payments owed and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the house is then transferred to you as new owner and appropriate title insurance is issued as outlined in the escrow instructions.
The escrow company receives a payment at the completion of closing. You'll know when it's time to submit the form of payment.