Let's talk about "escrow". When you're closing on your new place, a neutral, third party (known as the escrow holder or the escrow agent) is used to ensure the process will close appropriately and in a timely manner. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. PayPal is a simple way to think of an escrow company.
Tying up any loose ends like receiving funds, completing forms, securing the documents for loans and liens, and making sure you get a spotless title to the home before your purchase gets finalized are all part of the job of the escrow holder.
Escrow agents want to obtain the following pieces of paperwork:
- Tax statements
- 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
You're ready to close when all parts are finished in escrow process. At this time, all payments and fees for inspections, title insurance and real estate commissions are collected. Title to the house is then transferred to you as now current homeowner and related title insurance is issued as noted in the escrow policy.
The escrow company receives a payment when the closing is complete. I'll keep you updated on what comes next.