As we show you in this video, an escrow account is an account that is established by your lender. It’s created to set aside a portion of your monthly mortgage payment to cover annual charges for homeowner’s insurance, mortgage insurance (if applicable), and property taxes.
Escrow accounts are a good idea because they assure money will always be available for these payments.
If you use an escrow account to pay property tax or homeowner’s insurance make sure you are not penalized for late payments since it is the lender’s responsibility to make those payments.