First, a little about "escrow". When you're closing on your new home, a neutral, third party (known as the escrow holder or the escrow agent) is used to guarantee the process will close correctly and in a certain amount of time. A house is said to be in escrow when in the closing process, funds is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. A simple way to understand what an escrow company does is to think of how you might use PayPal for Internet purchases.
The escrow company makes sure that the terms and conditions of the agreement between the sellers and the buyers are performed prior to the sale being finalized.
These are the legal documents that escrow agents usually look for:
- 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
- Fire and other insurance policies
You're ready to close when all steps are finished in escrow process. All payments owed and fees are taken and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the house is then given to you as now current homeowner and correct title insurance is issued as outlined in the escrow policy.
The escrow company gets a payment when the closing is complete. As your agent, I'll inform you of the acceptable way of paying.