First, a little about "escrow". When you're closing on your new house, an escrow agent is used to ensure the transaction will close properly and in a timely manner. A house is said to be in escrow when in the closing process, money is secured by a third party on behalf of a buyer and a seller when the transaction is taking place. A simple way to think of what an escrow company does is to think of how you might use PayPal for Internet purchases.
The escrow company is careful to assure that all terms and conditions of the seller's and buyer's agreement are performed prior to the sale being finalized. This includes securing payments and certificates, finishing required forms, and seeking out the release documents for any loans or liens that are to be cleared with the transaction, assuring you have a free title to your place before the negotiated price is fully paid.
The documents the escrow company may secure include:
- 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
Upon completion of all instructions of the escrow, closing can take place. All debts and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). The house's title gets transferred to you and title insurance is issued per the steps of your individual escrow process.
When closing is completed, you'll pay the fees to the escrow company. I'll keep you up-to-date on the next steps.