Let's talk about "escrow". To close the sale of a house, a neutral, third party (the escrow company) is employed to assure the process will close properly and on time. A home is said to be in escrow when in the closing transaction, money is secured by a third party on behalf of two parties when the exchange of money takes place. An easy way to understand the concept of what an escrow company does is to compare it to PayPal for online purchases.
The escrow agent makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are reached prior to the sale being finished. This includes securing monies and certificates, signing required forms, and obtaining the release documents for any loans or liens that were paid with the transaction, assuring you have a free title to your home before the negotiated price is fully paid.
These are the pieces of paperwork that escrow companies usually look to collect:
- 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
- Fire and other insurance policies
You're ready to close when all steps are finished in escrow process. All payments owed and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then receive the title to the property and the title insurance gets dispersed as stated in the escrow instructions.
When closing is completely finished, you'll submit a payment to the escrow holder. As your real estate agent, I'll inform you of the acceptable way of paying.