Escrow is an account where your lender collects property taxes and homeowners insurance as part of your monthly payment. Instead of paying those bills in large lump sums once or twice a year, you contribute monthly and the lender pays them on your behalf when they’re due. It simplifies budgeting and ensures taxes and insurance stay current. Think of escrow as a convenience system — not an extra charge.
Some parts of the country use the term escrow to describe the period of time from when the property goes under contract to closing and has nothing to do with the escrow of your taxes and insurance that the lender holds to pay these bills when they come due. They use the word escrow because after contract, the buyer puts their deposit money in escrow with the title agent or attorney, preparing for the closing to happen.
Please consult your Mortgage Advisor for guidance specific to your situation before making changes.
