Let's talk about "escrow". When you're closing on your new property, an escrow agent is used to make sure the transaction will close appropriately and in a certain amount of time. A house is said to be in escrow when in the closing transaction, money is held by a third party on behalf of two parties when the exchange of money takes place. For example, in an Internet auction, PayPal is the reliable third party that holds the buyer's cash, and then disburses the money to the seller.
The escrow holder makes sure that all terms and conditions of the seller's and buyer's agreement are reached prior to the sale being finalized. This includes securing payments and documents, filling out required forms, and getting the release documents for any loans or liens that were cleared with the transaction, assuring you have a free title to your property before the agreed upon price is fully paid.
Escrow agents want to obtain the following forms:
- 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
You're ready to close when each step of the finished in escrow process. All debts and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). The house's title is given to you and title insurance is issued per the steps of your particular escrow process.
At the close of escrow, payments are submitted in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.