Let's talk about "escrow". To finish the sale of a property, a neutral, third party (the escrow holder) is employed to assure the process will close appropriately and on time. Escrow companies hold money for "safe-keeping" in an exchange between a buyer and seller. PayPal is a simple way to think of an escrow company.
The escrow holder insures that all terms and conditions of the seller's and buyer's agreement are completed prior to the sale being finished. This includes securing monies and documents, filling out required forms, and seeking out the release documents for any loans or liens that have been cleared with the transaction, assuring you have a clear title to your home before the agreed upon price is fully paid.
The pieces of paperwork the escrow holder may obtain include:
- 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
Closing on the home takes place when the steps of the escrow are done. All expenses like title insurance, inspections and real estate commissions are paid. Title to the home is then given to you as buyer and appropriate title insurance is issued as noted in the escrow instructions.
When closing is finished, you'll pay the fees to the escrow company. You'll know when it's time to submit the form of payment.