Mortgage Glossary
Escrow
Also called: escrow account, impounds, escrowed taxes
Definition
Two related meanings: a neutral third party holding funds and documents during a transaction, and the account your servicer uses to collect and pay property taxes and homeowners insurance with your mortgage payment.
Why it matters
In Northeast Ohio, property taxes vary widely by community, so the escrow portion of a payment can differ by hundreds of dollars between two similarly priced homes.
Related terms
- Property Taxes
- Taxes assessed by the county on real property, based on an assessed value and local levies, and usually collected through your escrow account.
- Homeowners Insurance
- A policy covering damage to the home and certain liability. Lenders require coverage and typically collect the premium through escrow.
- PITI
- Principal, Interest, Taxes and Insurance: the four parts of a typical escrowed mortgage payment, plus HOA dues or mortgage insurance when they apply.
Written by
Manny Oloyede, Mortgage Broker
NMLS #1824463 | Ultimate Mortgage Brokers LLC NMLS #2619461 | Licensed in OH | KY | NC | PA | SC | TN | TX
I have worked in mortgage lending since 2018 out of the Akron / Cuyahoga Falls Branch, helping buyers, homeowners and investors across Northeast Ohio and every state where I am licensed. These guides reflect the questions I answer most often, written the way I would explain them on a call.
General education only, not financial, legal or tax advice, and not a commitment to lend. Guidelines vary by program and change over time. Manny Oloyede, NMLS #1824463. Ultimate Mortgage Brokers LLC, NMLS #2619461. Licensed in OH | KY | NC | PA | SC | TN | TX. Equal Housing Opportunity.
Want this applied to your actual numbers?
Definitions are the easy part. What matters is how the guideline reads against your income, credit and property.