Let's talk about "escrow". An escrow company is used to assure your property closes on time and the closing process goes smoothly. Escrow companies hold money for "safe-keeping" in an exchange between a buyer and seller. A simple way to understand what an escrow company does is to compare it to PayPal for online purchases.
The escrow company is careful to assure that all terms and conditions of the seller's and buyer's agreement are performed prior to the sale being completed. This includes securing funds and paperwork, finishing required forms, and getting the release documents for any loans or liens that were cleared with the transaction, assuring you have a free title to your house before the agreed upon price is fully paid.
The documents the escrow agent may collect include:
- 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
Closing on the house takes place when all of the procedures of the escrow are finished. At this time, all payments and fees for inspections, title insurance and real estate commissions are collected. The house's title gets transferred to you and title insurance is issued per the policies of your particular escrow process.
When closing is completely finished, you'll make a payment to the escrow company. You'll know when it's time to submit the form of payment.