What is an Escrow Account?

Posted by Laine Smith on 8/2/13 12:39 PM

An escrow account is a financial instrument created in order to store money collected by a lender to pay for property taxes and hazard insurance when they become due by a third party. A lender will usually require monthly escrow payments to ensure that they have enough funds to pay for taxes and insurance. Since an escrow account is often used in the sale of a home, lenders will require these payments to guarantee that their collateral is secure.

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