Financial
Escrow Account
An account managed by your mortgage servicer that collects a portion of your property taxes and homeowners insurance premiums as part of your monthly mortgage payment. The servicer then pays those bills on your behalf when they are due. Escrow accounts help ensure your taxes and insurance stay current, which protects both you and the lender. Your escrow payment is adjusted annually based on actual tax and insurance costs.
Why It Matters
Escrow Account directly affects how much you pay for your home and how you build wealth through homeownership. Understanding the financial mechanics of your mortgage helps you make choices that save money over the long term.
Use mortgage calculators to see how escrow account impacts your specific numbers. Even small differences in financial terms can add up to tens of thousands of dollars over the life of a 30-year mortgage.