Let's talk about "escrow". When you're closing on your new property, an escrow holder is used to assure the transaction will close without problems and in a certain amount of time. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. PayPal is a good way to picture an escrow company.
The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's contract are completed prior to the sale being finished. This includes securing monies and documents, filling out required forms, and obtaining 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 final price is fully paid.
The documents the escrow holder may collect 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
You're ready to close when every step is complete in escrow process. All debts and fees are collected and paid at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then obtain the title to the property and the title insurance gets dispersed as noted in the escrow instructions.
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.