First, a little about "escrow". When you're closing on your new place, an escrow company is used to make certain the transaction will close appropriately and in a timely manner. When funds are 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 secure third party that holds the buyer's payment, and then disburses the money to the seller.
The escrow holder is careful to assure that all terms and conditions of the seller's and buyer's contract are reached prior to the sale being finished. This includes getting monies and certificates, signing required forms, and seeking out the release documents for any loans or liens that were cleared with the transaction, assuring you have a clear title to your property before the negotiated price is fully paid.
Escrow companies compile the following records:
- 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
Closing on the home happens when the steps of the escrow are done. All debts and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). The house's title goes to you and title insurance is issued per the steps of your particular escrow agreement.
The escrow holder receives a payment at the completion of closing. I'll keep you updated on what comes next.