Let's talk about "escrow". To close the sale of a house, a neutral, third party (the escrow company) is brought into the picture to assure the transaction will close perfectly and on time. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. An everyday way to understand what an escrow company does is to compare it to PayPal for online purchases.
Settling the last details like obtaining funds, signing forms, securing the documents for loans and liens, and making sure you get a clean title to the home prior to your purchase gets finalized are all parts of closing in which an escrow company is useful.
Escrow companies collect the following legal documents:
- 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
- Loan documents
- Tax statements
Upon completion of all portions of the escrow, closing can take place. All expenses like title insurance, inspections and real estate commissions are paid. You'll then obtain the title to the home and the title insurance gets dispersed as outlined in the escrow instructions.
At the close of escrow, fees are paid in an acceptable form to the escrow. I'll keep you informed on what comes next.