First, a little about "escrow". When you're closing on your new house, an escrow agent is used to ensure the transaction will close correctly and on time. A house 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 transaction is taking place. An everyday way to understand the concept of what an escrow company does is to think of how you might use PayPal for online purchases.
Settling the last details like receiving funds, completing forms, obtaining the documents for loans and liens, and making sure you get a clear title to the property prior to your purchase gets finalized are all part of the job of the escrow company.
These are the documents that escrow agents usually compile:
- Loan documents
- 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
Upon finishing of all portions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. The house's title gets handed over to you and title insurance is issued per the steps of your individual escrow process.
The escrow company gets a payment when the closing is complete. You'll know when it's time to submit the form of payment.