First, a little about "escrow". To complete the sale of a home, a neutral, third party (the escrow company) is engaged to assure the transaction will close appropriately and on time. A house is said to be in escrow when in the closing process, payment is secured by a third party on behalf of two parties when the transaction is taking place. An everyday way to understand the concept of what an escrow company does is to compare it to PayPal for Internet purchases.
Settling the last details like obtaining funds, completing forms, securing the documents for loans and liens, and assuring you get a spotless title to the home in preparation of your purchase gets finalized are all parts of closing in which an escrow agent is useful.
These are the records that escrow companies usually look for:
- 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
- Terms of sale and any seller-assisted financing
Upon completion of all instructions of the escrow, closing can take place. At this time, all payments and dues for inspections, title insurance and real estate commissions are paid out. You'll then secure the title to the house and the title insurance gets issued as noted in the escrow instructions.
At the close of escrow, payments of funds are made in an acceptable form to the escrow. You'll know when it's time to submit the form of payment.