Escrow Account

An escrow account is a separate bank account, held by the lender or mortgage servicer of your home loan out of which certain property bills are paid. This includes property taxes and insurance that you're responsible for but not necessarily part of the principal owed on your monthly payment. Sometimes called an "impound" account, these funds help protect you from any potential defaults in paying those expenses while also guaranteeing them to be covered so long as they remain current with their payments over time
- Property Taxes: These include anything relating to keeping up appearances - lawns trimmed and flowers watered; roofs repaired before leaks can create further damage
- Insurance: Protection against things like flooding

Escrow is like a separate account that your mortgage lender can dip into to pay for different property bills. Property taxes and insurance are two examples of these types of costs, which you would typically want to be paid out from an escrow account instead if they were not covered by the loan itself.

An escrow account is a separate account held by the mortgage lender. It’s basically used to help with some of your property bills, like taxes and insurance, which are paid out from this fund rather than as part of your loan payment.