First, a little about "escrow". A neutral, third party (known as the escrow holder or the escrow agent) is hired to assure your place closes on time and the process goes smoothly. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. PayPal is a simple way to think of an escrow company.
Settling the last details like receiving funds, finishing forms, getting the documents for loans and liens, and making sure you get a spotless title to the property in preparation of your purchase gets finalized are all part of the job of the escrow agent.
The pieces of paperwork the escrow holder may collect include:
- 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
Closing on the home takes place when the steps of the escrow are finished. All outstanding payments and fees are collected and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). Title to the home is then transferred to you as new homeowner and correct title insurance is issued as noted in the escrow policy.
The escrow holder receives a payment at the completion of closing. I'll keep you informed on what comes next.