Let's talk about "escrow". An escrow holder is used to assure your home closes on time and the closing process goes smoothly. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. A simple way to think of what an escrow company does is to think of how you might use PayPal for online purchases.
Tying up any loose ends like receiving funds, signing forms, securing the documents for loans and liens, and making sure you get a clear title to the house prior to your purchase gets finalized are all parts of closing in which an escrow company is useful.
Escrow agents compile the following documents:
- 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
Closing on the home happens when all of the procedures of the escrow are complete. 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 now current homeowner and appropriate title insurance is issued as outlined in the escrow policy.
The escrow agent receives a payment at the completion of closing. You'll know when it's time to submit the form of payment.