Escrow: An escrow agent is used to assure your property closes on time and the money exchanging part of closing goes smoothly. A home is said to be in escrow when in the closing process, money is held by a third party on behalf of a buyer and a seller when the transaction is taking place. For example, in an online auction, PayPal is the secure third party that obtains the buyer's money, and then hands over the payment to the seller.
The escrow company makes sure that all terms and conditions of the seller's and buyer's contract are met prior to the sale being finished. This includes getting monies and documents, filling out required forms, and seeking out the release documents for any loans or liens that are to be paid off with the transaction, assuring you have a clear title to your house before the asking price is fully paid.
The documents the escrow holder may obtain include:
- Loan documents
- 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
Upon finishing of all portions of the escrow, closing can take place. At this time, all payments and fees for inspections, title insurance and real estate commissions are paid out. Title to the house is then transferred to you as now current homeowner and related title insurance is issued as outlined in the escrow instructions.
At the close of escrow, payments of funds are made in an acceptable form to the escrow. I'll keep you updated on what comes next.