Escrow: A neutral, third party (known as the escrow holder or the escrow agent) is hired to assure your property closes on time and the process goes smoothly. Escrow companies hold money for "safe-keeping" in transactions between a buyer and seller. An easy way to understand what an escrow company does is to think of the use of PayPal for online purchases.
The escrow agent is careful to assure that all terms and conditions of the seller's and buyer's negotiated agreement are met prior to the sale being completed. This includes getting payments and records, completing required forms, and obtaining the release documents for any loans or liens that have been paid with the transaction, assuring you have a clear title to your property before the purchase price is fully paid.
The certificates the escrow company may collect 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 dues for inspections, title insurance and real estate commissions are paid out. You'll then secure the title to the home and the title insurance gets issued as noted in the escrow instructions.
The escrow agent gets a payment at the completion of closing. I'll keep you up-to-date on the next steps.