First, a little about "escrow". When you're closing on your new home, a neutral, third party (known as the escrow holder or the escrow agent) is used to make sure the process will close correctly and in a timely manner. When payment is held by a third party in a transaction between a buyer and a seller, it's in escrow. A simple way to understand the concept of what an escrow company does is to think of the use of PayPal for online purchases.
Clearing the final hurdles like receiving funds, signing forms, getting the documents for loans and liens, and making sure you get a spotless title to the home in preparation of your purchase gets finalized are all part of the job of the escrow holder.
These are the legal documents that escrow agents usually compile:
- 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
- Title insurance policies
Upon finishing of all instructions of the escrow, closing can take place. All debts and fees are taken and paid off at this time (covering expenses such as title insurance, inspections, real estate commissions). You'll then get the title to the property and the title insurance gets issued as outlined in the escrow instructions.
At the close of escrow, payments are submitted in an acceptable form to the escrow. I'll keep you informed on the procedure.