What is an escrow account?
An escrow account is set up at the time of closing for the purpose of paying future hazard insurance, property tax and mortgage insurance premiums each year. As part of your monthly mortgage payment, 1/12 of your combined premiums are collected for deposit into this account until we pay the premium on your behalf.
An “escrow,” or “impound,” account is maintained by your lender to cover the taxes and insurance that must be paid each year for your home. For most loans the lender is provided with the information about the property taxes and homeowners insurance that will be due annually. The lender then divides the total into 12 equal amounts and adds this to the amount that is due on your loan each month. When the taxes and insurance are due the lender makes the payment on your behalf. If you sell your home, any funds leftover in the escrow account will be refunded to you.
An escrow account is a fund established for the collection and payment of property taxes, hazard insurance, and mortgage insurance premiums. Escrow payments are conveniently collected as a part of your monthly loan payment. The balance builds as monthly payments are collected, and it is reduced as we pay your property taxes, hazard insurance, and mortgage insurance premiums.
An escrow account is typically established at the time that you close your mortgage loan. This account is held by the lender for the future payments of recurring items relating to the mortgaged property, such as real estate taxes and insurance premiums. Lenders usually require you to pay an initial amount for each of those items to start the reserve account at the time of closing and then the lender coordinates those payments as they become due.
