Escrow: When you're closing on your new home, a neutral, third party (known as the escrow holder or the escrow agent) is used to guarantee the transaction will close without problems and in a timely manner. Escrow agents hold money for "safe-keeping" in a deal between a buyer and seller. A simple way to think of what an escrow company does is to think of the use of PayPal for online purchases.
Tying up any loose ends like taking in funds, completing forms, obtaining the documents for loans and liens, and making sure you get a clean title to the house prior to your purchase gets finalized are all part of the job of the escrow agent.
These are the documents that escrow holders usually compile:
- 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 every step is done in escrow process. At this time, all payments and fees for inspections, title insurance and real estate commissions are taken. Title to the house is then given to you as now current homeowner and correct title insurance is issued as outlined in the escrow instructions.
At the close of escrow, fees are paid in an acceptable form to the escrow. As your agent, I'll let you know what is an acceptable way of paying.