First, a little about "escrow". When you're closing on your new home, an escrow holder is used to assure the transaction will close properly and on time. A house is said to be in escrow when in the closing transaction, funds is held by a third party on behalf of two parties when the transaction is taking place. PayPal is a good example of an escrow company.
The escrow agent insures that all terms and conditions of the seller's and buyer's contract are completed prior to the sale being finished. This includes getting monies and certificates, signing required forms, and obtaining the release documents for any loans or liens that were paid off with the transaction, assuring you have a clear title to your house before the negotiated price is fully paid.
The documents the escrow holder may secure include:
- 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
- Loan documents
You're ready to close when all steps are finished in escrow process. 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 home is then transferred to you as new homeowner and appropriate title insurance is issued as noted in the escrow instructions.
The escrow agent gets a payment when the closing is complete. As your real estate professional, I'll inform you of the acceptable form of payment.