Why Do I Need to Consider an Escrow?

An Escrow account is a way to set aside funds into a type of Trust in order to pay expenses that may arise form the purchase and legal maintenance of a home. The amount is typically set up by the lender (known as Escrow Impound) in which the borrower makes additional payments (usually incorporated into the monthly mortgage payment) in order to pay such items as yearly taxes, hazard insurance, assessments, and mortgage inusrance premiums. Lenders are typically reviewed periodically to determine if they are withholding enough funds form the borrower's monthly mortgage payment to cover anticipated expenses.

Another method is to use an Escrow Agent—a third party who holds money and documents until all conditions of an agreement are satisfied and then directs the closing of the transaction.

Escrows are optional and you may choose to set the anticipated expenses aside yourself in a monthly financial account. The choice is up to you.