Let's talk about "escrow". To complete the sale of a place, a neutral, third party (the escrow agent) is engaged to assure the transaction will close properly and on time. A place is said to be in escrow when in the closing process, payment 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 transaction, PayPal is the neutral third party that obtains the buyer's funds, and then hands over the money to the seller.
Tying up any loose ends like receiving funds, signing forms, getting the documents for loans and liens, and making sure you get a clear title to the home prior to your purchase gets finalized are all parts of closing in which an escrow holder is useful.
The pieces of paperwork the escrow holder may secure include:
- Title insurance policies
- Terms of sale and any seller-assisted financing
- Requests for payment for various services to be paid out of escrow funds
- Loan documents
- Tax statements
- Fire and other insurance policies
Closing on the house takes place when the steps of the escrow are done. All expenses like title insurance, inspections and real estate commissions are paid. The house's title is given to you and title insurance begins per the steps of your individual escrow agreement.
At the close of escrow, payment of funds shall be made in an acceptable form to the escrow. I'll keep you informed on what comes next.