First, a little about "escrow". When you're closing on your new place, a neutral, third party (known as the escrow holder or the escrow agent) is used to make certain the process will close without problems and in a specific time frame. When funds are held by a third party in a transaction between a buyer and a seller, it's in escrow. For example, in an online transaction, PayPal is the reliable third party that holds the buyer's funds, and then sends the funds to the seller.
Settling the last details like obtaining funds, finishing forms, getting the documents for loans and liens, and assuring you get a clean title to the home in preparation of your purchase gets finalized are all part of the job of the escrow agent.
These are the pieces of paperwork that escrow companies usually look to collect:
- 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
- Fire and other insurance policies
You're ready to close when all parts are complete in escrow process. All expenses like title insurance, inspections and real estate commissions are paid. Title to the house is then given to you as new homeowner and correct title insurance is issued as noted in the escrow policy.
When closing is finished, you'll make a payment to the escrow holder. I'll keep you up-to-date on the next steps.