Escrow account (impound)
An account the loan servicer keeps to pay your property taxes and homeowners insurance, funded by part of each monthly payment. It is reviewed yearly, so the payment can rise or fall with tax and insurance bills.
Also called: impound account, impounds, escrow impound
Related terms
Short for principal, interest, taxes and insurance, the four parts of a typical monthly mortgage payment. Lenders use PITI, plus any HOA dues or mortgage insurance, to judge whether you can afford the loan.
A yearly tax set by local governments based on a property's assessed value. Lenders usually collect it monthly through escrow, and rates vary widely by location.
A policy covering the home and belongings against damage such as fire or wind, plus liability. Lenders require it before closing. Standard policies do not cover flood, and often not earthquake.
An arrangement where a neutral third party holds money and documents until every condition of the sale is met. Some states use escrow companies to close; others use title companies or attorneys.
A separate policy that covers flood damage, which regular homeowners insurance excludes. Lenders require it for federally backed loans on homes in high-risk flood zones; it is available through the NFIP or private insurers.