What is the definition of Escrow Account?
Escrow Account refers to the funds used to collect regular payments such as premiums for homeowners and mortgage insurance, lease payments and even property taxes and other property-related payments.
The escrow account is in the name of the borrower. This is established at the time a borrower takes out a mortgage so that payments the homeowner has to pay in relation to the property are paid and paid on time. The escrow account is important to the lender, since it ensures that the homeowners insurance policy does not lapse, or the property is not foreclosed because of failure to pay for the property taxes. The lender wants to ensure that its investment in the mortgage is protected.
The borrower, according to the mortgage agreement, will make regular deposits to the escrow account.
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