What is an escrow account?
Answered by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
An escrow account is held by your lender to collect and pay your property taxes and homeowners insurance. A portion of each monthly payment goes into it, and the lender pays the bills when they're due.
It spreads big annual bills into manageable monthly amounts and is required on most loans with less than 20% down. In Florida, where insurance can be large, escrow protects you from a surprise lump-sum bill. Your account is reviewed yearly and adjusted.
What escrow does
An escrow account holds money for your taxes and insurance. Your lender collects a slice each month with your payment. Then it pays those bills for you when they come due.
It spreads big annual costs across 12 months. You avoid a giant tax or insurance bill landing all at once.
Escrow in Florida
Florida insurance and taxes make escrow especially useful here. Premiums can be large, so smoothing them helps. Your payment may adjust yearly as costs change.
We explain your escrow setup before closing. Bring questions and we will show exactly what your monthly payment includes.