Let's talk about "escrow". When you're closing on your new property, an escrow holder is used to assure the process will close properly and in a specific time frame. A home is said to be in escrow when in the closing process, money is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. For example, in a Web purchase, PayPal is the secure third party that holds the buyer's funds, and then sends the money to the seller.
Tying up any loose ends like taking in funds, signing forms, securing the documents for loans and liens, and making sure you get a clear title to the house before your purchase gets finalized are all parts of closing in which an escrow company is useful.
These are the documents that escrow companies usually look for:
- Loan documents
- Tax statements
- 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
Closing on the home happens when all of the procedures of the escrow are complete. All outstanding payments and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the property is then given to you as now current homeowner and correct title insurance is issued as outlined in the escrow policy.
At the close of escrow, payments of funds are made in an acceptable form to the escrow. I'll keep you up-to-date on what comes next.