Let's talk about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is hired to assure your home closes on time and the money exchanging part of closing goes smoothly. A property is said to be in escrow when in the closing process, money 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. For example, in a Web transaction, PayPal is the neutral third party that holds the buyer's money, and then disburses the payment to the seller.
Clearing the final hurdles like obtaining funds, signing forms, obtaining the documents for loans and liens, and making sure you get a clear title to the house prior to your purchase gets finalized are all parts of closing in which an escrow holder is useful.
Escrow companies look for the following pieces of paperwork:
- 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
- Terms of sale and any seller-assisted financing
Upon completion 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 collected. You'll then get the title to the home and the title insurance gets dispersed as outlined in the escrow instructions.
When closing is completed, you'll pay the fees to the escrow agent. You'll know when it's time to submit the form of payment.