Escrow: A neutral, third party (known as the escrow holder or the escrow agent) is brought on to assure your place closes on time and the process goes smoothly. A place is said to be in escrow when in the closing transaction, money is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. PayPal is a good example of an escrow company.
Clearing the final hurdles like obtaining funds, signing forms, securing the documents for loans and liens, and making sure you get a spotless title to the house before your purchase gets finalized are all part of the job of the escrow company.
The documents the escrow holder may obtain include:
- 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
Upon completion of all instructions of the escrow, closing can take place. All payments owed and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then get the title to the property and the title insurance gets dispersed as stated in the escrow instructions.
When closing is completely finished, you'll make a payment to the escrow agent. As your agent, I'll let you know what is an acceptable form of payment.