Escrow: When you're closing on your new home, an escrow agent is used to make sure the process will close appropriately and in a timely manner. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an Internet purchase, PayPal is the neutral third party that holds the buyer's cash, and then hands over the money to the seller.
The escrow company insures that all terms and conditions of the seller's and buyer's contract are met prior to the sale being finished. This includes securing monies and documents, filling out required forms, and seeking out the release documents for any loans or liens that have been paid with the transaction, assuring you have a free title to your place before the final price is fully paid.
Escrow agents collect the following pieces of paperwork:
- 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
- Loan documents
- Tax statements
You're ready to close when all steps are complete in escrow process. All payments owed and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the house is then given to you as new owner and appropriate title insurance is issued as noted in the escrow policy.
At the close of escrow, payment of funds shall be made in an acceptable form to the escrow. As your real estate agent, I'll let you know what is an acceptable way of paying.