Let's talk about "escrow". To complete the sale of a house, a neutral, third party (the escrow company) is brought into the picture to assure the transaction will close appropriately 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 auction, PayPal is the reliable third party that holds the buyer's funds, and then sends the funds to the seller.
Tying up any loose ends like receiving funds, signing forms, getting the documents for loans and liens, and making sure you get a clean title to the home in preparation of your purchase gets finalized are all part of the job of the escrow company.
The records the escrow agent may secure include:
- 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
- Tax statements
Closing on the home happens when the steps of the escrow are finished. At this time, all payments and fees for inspections, title insurance and real estate commissions are taken. You'll then obtain the title to the house and the title insurance gets issued as agreed upon in the escrow instructions.
When closing is completely finished, you'll submit a payment to the escrow agent. You'll know when it's time to submit the form of payment.