Escrow: When you're closing on your new home, an escrow agent is used to assure the process will close without problems and in a timely manner. When money is held by a third party in a transaction between a buyer and a seller, it's in escrow. An easy way to think of what an escrow company does is to think of how you might use PayPal for Internet purchases.
The escrow agent insures that all terms and conditions of the seller's and buyer's negotiated agreement are performed 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 paid with the transaction, assuring you have a clear title to your place before the purchase price is fully paid.
The records the escrow holder may obtain include:
- 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
Upon completion of all instructions of the escrow, closing can take place. All debts and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then secure the title to the property and the title insurance gets dispersed as noted in the escrow instructions.
At the close of escrow, fees are paid in an acceptable form to the escrow. As your real estate professional, I'll let you know what is an acceptable way of paying.