Escrow: When you're closing on your new home, an escrow company is used to assure the transaction will close without problems and in a timely manner. A property 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 exchange of money takes place. A simple way to understand the concept of what an escrow company does is to compare it to PayPal for online purchases.
Clearing the final hurdles like taking in funds, signing forms, securing the documents for loans and liens, and assuring you get a clear title to the property in preparation of your purchase gets finalized are all parts of closing in which an escrow holder is useful.
These are the documents that escrow holders usually compile:
- 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
Upon finishing of all instructions of the escrow, closing can take place. At this time, all payments and fees for inspections, title insurance and real estate commissions are taken. You'll then receive the title to the house and the title insurance gets issued as agreed upon in the escrow instructions.
At the close of escrow, in an acceptable form to the escrow. I'll keep you informed on what comes next.