What is an escrow account?

An escrow account is a type of bank account set up to hold funds for a specific purpose, such as a mortgage payment. In the context of a mortgage loan in Pennsylvania, an escrow account is an account maintained by a lender that collects money from the borrower to pay the homeowner’s property taxes and insurance premiums. When the borrower makes a mortgage payment, a portion of the money is set aside in the escrow account and is held until the taxes and insurance premiums are due. Then, the lender makes the payments for these expenses on behalf of the borrower. The purpose of an escrow account is to ensure that the taxes and insurance premiums are paid on time and that the homeowner does not have to worry about this financial responsibility. Having an escrow account also helps the lender by protecting their investment in the home, as the taxes and insurance premiums will be paid when they are due.

Related FAQs

Are there any tax incentives for mortgages?
What is an "assumption" mortgage?
Can I get a mortgage if I am self-employed?
What is a mortgage discount point?
What is a mortgage payment?
Are there any mortgage programs for first-time homebuyers?
What factors determine the mortgage rate?
How can I lower my mortgage payments?
What is a bridge loan?
How does a lender decide whether to approve my mortgage application?

What is an escrow account?

Related FAQs

Related Blog Posts