First, a little about "escrow". When you're closing on your new place, an escrow agent is used to guarantee the process will close appropriately and in a specific time frame. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. An easy way to understand the concept of what an escrow company does is to compare it to PayPal for Internet purchases.
The escrow holder insures that all terms and conditions of the seller's and buyer's contract are reached prior to the sale being finished. This includes securing payments and paperwork, signing required forms, and getting the release documents for any loans or liens that are to be paid off with the transaction, assuring you have a free title to your home before the negotiated price is fully paid.
Escrow holders compile the following forms:
- 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
You're ready to close when all steps are done in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. You'll then receive the title to the house and the title insurance gets issued as agreed upon in the escrow instructions.
When closing is finished, you'll make a payment to the escrow agent. As your real estate professional, I'll inform you of the acceptable way of paying.