Simple Real Estate Definitions : Escrow Account

Mortgage and Lending with Premier Mortgage Financial, LLC

Escrow reserve accounts collect 1/12 of the annual bill each monthAn escrow account is a designated savings account into which funds get deposited for a specific purpose.

With respect to real estate and home loans, escrow accounts are used to pay real estate tax bills and homeowners insurance payments.

Escrow accounts are managed and disbursed by lenders.

When a homeowner "escrows" his mortgage, along with his scheduled monthly mortgage payment, he must also send an additional payment to the lender equal to 1/12 of the home's annual real estate tax bill plus 1/12 of the annual homeowners insurance bill.

By sending a pro rata portion of the tax and insurance bill each month, the homeowner's escrow account will always, in theory, have enough funds to make payments in full as tax bills and insurance premiums come due.

If you are in need of help for your next real estate transaction or simply have questions contact me.  I am Matt Bowles with Premier Mortgage in Jackson Tennessee.  I am the tennessee mortgage guy @


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