Escrow: To finish the sale of a house, a neutral, third party (the escrow holder) is engaged to assure the process will close appropriately and on time. A home is said to be in escrow when in the closing process, funds is secured by a third party on behalf of two parties (in this case, a buyer and a seller) when the exchange of money takes place. For example, in a Web purchase, PayPal is the secure third party that holds the buyer's funds, and then hands over the money to the seller.
Settling the last details like receiving funds, finishing forms, obtaining the documents for loans and liens, and assuring you get a clean title to the property prior to your purchase gets finalized are all part of the job of the escrow holder.
These are the documents that escrow companies usually look to collect:
- 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 completion of all instructions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. You'll then get the title to the house and the title insurance gets issued as agreed upon in the escrow instructions.
At the close of escrow, payments are submitted in an acceptable form to the escrow. I'll keep you updated on the procedure.