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What is a tax and/or insurance escrow?

April 26, 2017escrow Insurance tax

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What is a tax and/or insurance escrow?

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A tax and/or insurance escrow is an agreement between the lender and borrower where the borrower pays monthly into an account an amount equal to 1/12th the total property tax and/or hazard insurance premium due for a 12 month period. The escrow account is administered by the lender and is most often a non-interest bearing account. The escrow funds are disbursed by the lender for payment of property tax and hazard insurance premiums when due.