First, a little about "escrow". When you're closing on your new home, an escrow holder is used to insure the transaction will close appropriately and in a certain amount of time. When funds are 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 reliable third party that obtains the buyer's funds, and then hands over the money to the seller.
The escrow company makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being completed. This includes securing funds and records, signing required forms, and obtaining the release documents for any loans or liens that were paid off with the transaction, assuring you have a free title to your house before the purchase price is fully paid.
These are the pieces of paperwork that escrow companies usually compile:
- 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
- Loan documents
Closing on the house takes place when all of the procedures of the escrow are done. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then transferred to you as new homeowner and correct title insurance is issued as outlined in the escrow policy.
The escrow holder gets a payment when the closing is complete. As your real estate professional, I'll inform you of the acceptable form of payment.