First, a little about "escrow". When you're closing on your new property, an escrow holder is used to guarantee the process will close properly and in a specific time frame. A property is said to be in escrow when in the closing transaction, funds is held by a third party on behalf of two parties (in this case, a buyer and a seller) when the transaction is taking place. A simple way to understand the concept of what an escrow company does is to think of the use of PayPal for online purchases.
Tying up any loose ends like taking in funds, completing forms, getting the documents for loans and liens, and making sure you get a clean title to the property in preparation of your purchase gets finalized are all parts of closing in which an escrow company is useful.
These are the legal forms that escrow companies usually look for:
- 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
- Loan documents
Closing on the property happens when all of the procedures of the escrow are done. At this time, all payments and dues for inspections, title insurance and real estate commissions are collected. The home's title gets handed over to you and title insurance is issued per the policies of your particular escrow agreement.
When closing is completed, you'll make a payment to the escrow holder. As your real estate professional, I'll inform you of the acceptable form of payment.