Escrow: When you're closing on your new home, an escrow agent is used to guarantee the transaction will close correctly and in a timely manner. A place is said to be in escrow when in the closing process, funds is secured by a third party on behalf of a buyer and a seller when the exchange of money takes place. For example, in an online purchase, PayPal is the secure third party that obtains the buyer's funds, and then disburses the money to the seller.
The escrow company makes sure that all terms and conditions of the seller's and buyer's negotiated agreement are completed prior to the sale being completed. This includes receiving monies and paperwork, finishing required forms, and seeking out the release documents for any loans or liens that have been paid off with the transaction, assuring you have a free title to your property before the asking price is fully paid.
Escrow companies look for the following documents:
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
- Title insurance policies
- Terms of sale and any seller-assisted financing
Closing on the house takes place when all of the procedures of the escrow are done. At this time, all payments and fees for inspections, title insurance and real estate commissions are collected. The property's title gets handed over to you and title insurance begins per the policies of your individual escrow process.
At the close of escrow, payment of funds shall be made in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.