Definition
A neutral third-party account that holds funds during the home purchase process and, after closing, collects portions of monthly mortgage payments to pay property taxes and homeowners insurance on the borrower's behalf. Escrow protects both the lender and borrower by ensuring taxes and insurance are paid on time. Most lenders require escrow accounts.
Related Mortgage Terms
- Closing Costs
Fees and expenses paid at the finalization of a real estate transaction, typical...
- Homeowners Insurance
Insurance that protects against damage to the home, personal liability, and loss...
- Property Tax
An annual tax levied by local governments based on the assessed value of real pr...
- Amortization
The process of paying off a mortgage through regular monthly payments of princip...
- Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the int...
Understanding mortgage terminology helps you compare loan offers and make informed decisions. Use our mortgage calculator to see how these terms affect your monthly payment.