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What is an impound account?

April 26, 2017account Impound

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What is an impound account?

3 Answers

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An impound account is a trust account established by the lender to hold money to pay for real estate taxes, and mortgage and homeowners insurance premiums as they are received each month.

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An impound account is set up by the bank to manage the payment of homeowner’s hazard insurance and/or property taxes. A portion (usually 1/12th of the estimated amount of the annualized payment) is included in your monthly payment. The bank then forwards scheduled payments on your behalf to pay the taxes and/or insurance. Impound accounts are not required on all loan products. Contact Us to discuss this with one of our Mortgage Professionals.

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An escrow account (also known as an impound account) is a separate account into which the lender puts a portion of each monthly mortgage payment; usually set up when the loan closes; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.