Escrow: When you're closing on your new property, an escrow company is used to make sure the process will close correctly and in a timely manner. A home is said to be in escrow when in the closing process, funds is secured by a third party on behalf of two parties when the exchange of money takes place. An everyday way to understand what an escrow company does is to think of how you might use PayPal for online purchases.
The escrow holder insures that all terms and conditions of the seller's and buyer's contract are performed prior to the sale being finalized. This includes securing payments and certificates, finishing required forms, and getting the release documents for any loans or liens that have been paid with the transaction, assuring you have a clean title to your home before the negotiated price is fully paid.
The records the escrow company may collect include:
- 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 dues for inspections, title insurance and real estate commissions are paid out. Title to the house is then transferred to you as new homeowner and appropriate title insurance is issued as noted in the escrow instructions.
When closing is completed, you'll make a payment to the escrow company. As your agent, I'll let you know what is an acceptable form of payment.