Home Buying 101: What is a Mortgage Escrow?

A mortgage escrow account is an account established by a mortgage lender to hold funds collected from a homeowner to pay for property taxes, homeowner's insurance, and other related expenses. The following items are typically included in a mortgage escrow account:

1. Property taxes: The lender will collect a portion of the homeowner's property taxes each month and hold them in escrow until the tax bill is due.

2. Homeowner's insurance: The lender will collect a portion of the homeowner's insurance premium each month and hold it in escrow until the premium is due.

3. Private mortgage insurance: If the homeowner is required to pay for private mortgage insurance, the lender will collect it each month and hold it in escrow until the premium is due.

4. Flood insurance: If the property is in a flood zone, the lender may require the homeowner to purchase flood insurance and collect the premiums each month.

5. Homeowner's association fees: If the property is part of a homeowner's association, the lender may collect the fees each month and hold them in escrow until they are due.

6. Other related expenses: The lender may also collect funds for other expenses, such as inspections or repairs, and hold them in escrow until they are paid.

Overall, a mortgage escrow account helps ensure that the homeowner stays current on their property-related expenses and helps prevent the homeowner from falling behind on their payments.

Click the links below to see more about home buying 101:

Connect with a Buyers Specialist

Home Buying 101: The Mortgage Process

Home Buying 101: Writing a Purchase Agreement

Home Buying 101: Your Offer has been Accepted! Now What??

Home Buying 101: The Inspection

Home Buying 101: What are Closing Costs?

Home Buying 101: The Closing

Home Buying 101: What is Mortgage Escrow?

Home Buying 101: The Importance of a Title Company