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What is an escrow account?

In addition to the principal and interest payment on your mortgage loan, you may elect to impound additional funds each month in an escrow account to pay for property taxes and insurance (or private mortgage insurance). With some mortgage products, impounding for taxes and insurance may be required.

 

Having an escrow account allows you to put aside a small portion each month toward the costs of insurance and property taxes. You send the additional funds each month when you make your mortgage payment. We hold the money in an escrow account and make the payments from the account when they are due.