Let's talk about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is used to assure your property closes on time and the process goes smoothly. A place is said to be in escrow when in the closing process, funds is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. A simple way to think of what an escrow company does is to compare it to PayPal for Internet purchases.
Tying up any loose ends like receiving funds, signing forms, securing the documents for loans and liens, and assuring you get a clean title to the property in preparation of your purchase gets finalized are all part of the job of the escrow company.
The documents the escrow company may obtain 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
You're ready to close when all parts 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 dispersed as agreed upon in the escrow instructions.
When closing is finished, you'll make a payment to the escrow company. You'll know when it's time to submit the form of payment.