What is a mortgage escrow?
An escrow account is an account in which your money is held for you and controlled by another party. In the case of a mortgage the escrow account is built up slowly with a portion of your monthly payment and used to pay a variety of expenses including insurance, property taxes, HOA fees, and PMI. The exact expenses to be covered vary based on the requirements of the lender.
An escrow account acts as a savings account that is managed by your mortgage servicer. Your mortgage servicer will deposit a portion of each mortgage payment into your escrow account to cover your estimated real estate taxes and insurance premiums. It’s that simple.