Let's talk about "escrow". An escrow agent is used to assure your home closes on time and the money exchanging part of closing goes smoothly. A place is said to be in escrow when in the closing transaction, payment is held by a third party on behalf of a buyer and a seller when the exchange of money takes place. A simple way to understand what an escrow company does is to think of the use of PayPal for online purchases.
The escrow agent makes sure that all terms and conditions of the seller's and buyer's agreement are reached prior to the sale being completed. This includes getting funds and records, signing required forms, and seeking out the release documents for any loans or liens that are to be paid off with the transaction, assuring you have a clean title to your home before the final price is fully paid.
The certificates the escrow agent may obtain include:
- 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 finishing of all portions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then transferred to you as new homeowner and appropriate title insurance is issued as noted in the escrow policy.
At the close of escrow, payments of funds are made in an acceptable form to the escrow. I'll keep you updated on what comes next.