Let's talk about "escrow". When you're closing on your new place, an escrow agent is used to assure the process will close without problems and in a specific time frame. Escrow companies hold money for "safe-keeping" in a deal between a buyer and seller. A simple way to understand what an escrow company does is to think of how you might use PayPal for online purchases.
The escrow holder makes sure that the terms and conditions of the agreement between the seller and buyer are reached prior to the sale being finished.
The documents the escrow agent may secure include:
- 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
Upon finishing of all instructions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then transferred to you as now current homeowner and correct title insurance is issued as outlined in the escrow instructions.
When closing is finished, you'll submit a payment to the escrow company. You'll know when it's time to submit the form of payment.