Escrow
An escrow account is a dedicated account managed by your mortgage servicer that collects and holds funds for property taxes and homeowners insurance as part of your monthly mortgage payment.
Each month, a portion of your payment is deposited into escrow. When tax and insurance bills come due, the servicer pays them on your behalf. This ensures these critical obligations are always funded and paid on time.
Escrow is not an extra charge — it is a budgeting mechanism. The money collected belongs to you and is used exclusively for the taxes and insurance tied to your property.
Why This Matters: Escrow protects you from large lump-sum bills and ensures your property taxes and insurance never lapse. Understanding how your escrow account works helps you anticipate payment changes and avoid shortages.
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