What is an Escrow Impound Account in a Mortgage?
When a borrower takes out a mortgage, the lender typically sets up an escrow account, a pool of money put aside to pay expenses such as property tax and insurance. Escrow impound accounts ensure that fixed property expenses will be paid on time.How They WorkEvery month, the lender adds the amount that property taxes and insurance will cost, onto your monthly mortgage payments. They take the extra money, and then set it aside in an escrow account, where the money will be held until home insurance or property tax bills are due.BenefitsAn escrow impound account helps homeowners, who have trouble holding onto money, pay for fixed home expenses. Bank lenders prefer these accounts as well because they do not have to worry about homeowners being unable to make payments on necessary expenses.InsuranceWhen home insurance comes due every year, the money will be taken out of an escrow impound account.Property TaxesBanks want to make sure that they do not lose a property because of a homeowner not
