First, a little about "escrow". When you're closing on your new property, an escrow agent is used to make certain the transaction will close properly and in a certain amount of time. A place is said to be in escrow when in the closing transaction, money is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. A simple way to understand what an escrow company does is to compare it to PayPal for Internet purchases.
The escrow agent makes sure that the terms and conditions of the agreement between the two parties are completed in preparation of the sale being completed.
Escrow holders compile the following pieces of paperwork:
- 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
- Title insurance policies
Closing on the property takes place when all of the procedures of the escrow are finished. At this time, all payments and dues for inspections, title insurance and real estate commissions are collected. Title to the house is then transferred to you as new homeowner and related title insurance is issued as noted in the escrow policy.
When closing is in it's last step, you'll make a payment to the escrow company. As your real estate agent, I'll inform you of the acceptable way of paying.