Let's talk about "escrow". To close the sale of a home, a neutral, third party (the escrow agent) is employed to assure the transaction will close appropriately and on 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 auction, PayPal is the secure third party that holds the buyer's cash, and then sends the payment to the seller.
Clearing the final hurdles like taking in funds, completing forms, getting the documents for loans and liens, and making sure you get a clean title to the home before your purchase gets finalized are all part of the job of the escrow company.
These are the records that escrow companies usually look for:
- 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
- Tax statements
- Fire and other insurance policies
You're ready to close when all steps are finished in escrow process. At this time, all payments and dues for inspections, title insurance and real estate commissions are collected. You'll then obtain the title to the property and the title insurance gets issued as outlined in the escrow instructions.
When closing is in it's last step, you'll submit a payment to the escrow holder. You'll know when it's time to submit the form of payment.