Escrow: A neutral, third party (known as the escrow holder or the escrow agent) is hired to assure your home closes on time and the money exchanging part of closing goes smoothly. When payment is 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 obtains the buyer's cash, and then hands over the funds to the seller.
The escrow company makes sure that all terms and conditions of the seller's and buyer's agreement are performed prior to the sale being finished. This includes securing monies and records, filling out required forms, and obtaining the release documents for any loans or liens that have been cleared with the transaction, assuring you have a clear title to your place before the final price is fully paid.
These are the records that escrow holders usually look to collect:
- Loan documents
- 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
Upon finishing of all instructions of the escrow, closing can take place. All outstanding payments and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then receive the title to the home and the title insurance gets issued as stated in the escrow instructions.
At the close of escrow, fees are paid in an acceptable form to the escrow. As your agent, I'll let you know what is an acceptable form of payment.