Let's talk about "escrow". When you're closing on your new place, an escrow agent is used to assure the process will close appropriately and in a timely manner. A place is said to be in escrow when in the closing process, funds is held by a third party on behalf of two parties when the exchange of money takes place. An easy way to understand what an escrow company does is to compare it to PayPal for Internet purchases.
The escrow holder insures that all terms and conditions of the seller's and buyer's contract are performed prior to the sale being finalized. This includes receiving payments and records, signing required forms, and getting the release documents for any loans or liens that are to be paid off with the transaction, assuring you have a clean title to your property before the asking price is fully paid.
These are the legal forms that escrow companies usually compile:
- 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
Upon finishing of all portions of the escrow, closing can take place. All debts and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then receive the title to the house and the title insurance gets dispersed as outlined in the escrow instructions.
The escrow company receives a payment when the closing is complete. As your real estate professional, I'll let you know what is an acceptable form of payment.