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Anonymous
ANSWERS: 3
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A mortgage escrow service is much like a forced savings account. Money is paid directly to the escrow service where it is held until payments are due.
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My escrow pays my local taxes for me.
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Whenever you originate a new mortgage, an esvrow account is established, from which your homeowner insurance and property taxes will be paid by the bank servicing your loan. Notice on the final HUD-1 Settlement Statement (and on the original Good Faith Estimate) that your escrow account will be seeded with two or more months' worth of insurance and tax payments. This is really YOUR money, but it is being managed for you so that your insurance does not lapse or your taxes go unpaid. In most mortgages you will be allowed to pay taxes and insurance directly, but only after a prescribed time period (e.g., five years). In some cases, you may pay a premium to waive escrows.
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