Escrow: When you're closing on your new place, a neutral, third party (known as the escrow holder or the escrow agent) is used to make certain the process will close appropriately and in a specific time frame. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in a Web transaction, PayPal is the neutral third party that obtains the buyer's payment, and then disburses the payment to the seller.
The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's negotiated agreement are completed prior to the sale being completed. This includes receiving monies and paperwork, finishing required forms, and getting the release documents for any loans or liens that are to be paid off with the transaction, assuring you have a clean title to your house before the purchase price is fully paid.
These are the documents that escrow companies usually look for:
- 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
- Title insurance policies
You're ready to close when every step is done in escrow process. At this time, all payments and fees for inspections, title insurance and real estate commissions are paid out. You'll then receive the title to the home and the title insurance gets issued as outlined in the escrow instructions.
When closing is completely finished, you'll pay the fees to the escrow company. I'll keep you informed on the next steps.