First, a little about "escrow". To complete the sale of a property, a neutral, third party (the escrow agent) is employed to assure the process will close perfectly and on time. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an Internet transaction, PayPal is the reliable third party that obtains the buyer's payment, and then sends the money to the seller.
Tying up any loose ends like receiving funds, completing forms, obtaining the documents for loans and liens, and assuring you get a spotless title to the home prior to your purchase gets finalized are all parts of closing in which an escrow company is useful.
These are the records that escrow companies usually look to collect:
- 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 each step of the finished in escrow process. All outstanding payments and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). The property's title goes to you and title insurance begins per the policies of your individual escrow process.
When closing is completely finished, you'll make a payment to the escrow holder. As your real estate professional, I'll let you know what is an acceptable way of paying.