Let's talk about "escrow". To close the sale of a home, a neutral, third party (the escrow company) is employed to assure the transaction will close appropriately and on time. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. An everyday way to think of what an escrow company does is to think of how you might use PayPal for Internet purchases.
The escrow holder makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being finalized. This includes receiving payments and documents, filling out required forms, and getting the release documents for any loans or liens that have been paid with the transaction, assuring you have a clear title to your property before the final price is fully paid.
These are the pieces of paperwork that escrow agents usually compile:
- 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
- Tax statements
- Fire and other insurance policies
Upon finishing of all portions of the escrow, closing can take place. At this time, all payments and dues for inspections, title insurance and real estate commissions are collected. The property's title gets handed over to you and title insurance begins per the policies of your particular escrow agreement.
When closing is finished, you'll pay the fees to the escrow holder. You'll know when it's time to submit the form of payment.