Let's talk about "escrow". To finish the sale of a home, a neutral, third party (the escrow agent) is engaged to assure the transaction will close properly and on time. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an online transaction, PayPal is the secure third party that holds the buyer's payment, and then sends the funds to the seller.
Tying up any loose ends like receiving funds, finishing forms, getting the documents for loans and liens, and making sure you get a clear title to the house in preparation of your purchase gets finalized are all part of the job of the escrow agent.
The pieces of paperwork the escrow holder may secure include:
- 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
- Terms of sale and any seller-assisted financing
Closing on the property takes place when all of the procedures of the escrow are done. All payments owed and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). The home's title goes to you and title insurance is issued per the policies of your individual escrow agreement.
When closing is done, you'll submit a payment to the escrow company. I'll keep you updated on the procedure.