First, a little about "escrow". To finalize the sale of a place, a neutral, third party (the escrow holder) is employed to assure the process will close properly and on time. A house is said to be in escrow when in the closing transaction, payment is secured by a third party on behalf of a buyer and a seller when the transaction is taking place. An everyday way to understand the concept of what an escrow company does is to think of the use of PayPal for Internet purchases.
Tying up any loose ends like receiving funds, completing forms, securing the documents for loans and liens, and making sure you get a clean title to the property in preparation of your purchase gets finalized are all parts of closing in which an escrow holder is useful.
These are the pieces of paperwork that escrow agents usually look for:
- 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
Upon finishing of all instructions of the escrow, closing can take place. At this time, all payments and dues for inspections, title insurance and real estate commissions are taken. The home's title gets transferred to you and title insurance begins per the policies of your particular escrow process.
When closing is completely finished, you'll pay the fees to the escrow agent. You'll know when it's time to submit the form of payment.