What is escrow and how does it work?
In: Economics
Great answers for the general term, but the term is very often used to refer to one specific case, so I’ll put that here: Escrow is an account where the bank holds your money that you will owe for property taxes and homeowner’s insurance. They can’t just trust you to pay your taxes and insurance on time, because if you fail to pay and something happens, they get screwed as well. So they collect that money along with your regular mortgage payments, and then use it to pay the taxes and insurance when the bill is due.
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