Let's talk about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is brought on to assure your property closes on time and the process goes smoothly. When money 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 the use of PayPal for Internet purchases.
Settling the last details like receiving funds, signing forms, obtaining the documents for loans and liens, and assuring you get a clean title to the property in preparation of your purchase gets finalized are all part of the job of the escrow company.
Escrow companies collect the following pieces of paperwork:
- 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 completion 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 home is then given to you as new homeowner and correct title insurance is issued as noted in the escrow policy.
The escrow agent receives a payment when the closing is complete. I'll keep you updated on what comes next.