Video — Home Escrow Explained Visually

The S crow is kind of a mascot here, because there is no such bird. You wont hear the word "escrow" for years, and then youll hear it all the time if youre buying a home. Heres what the word means.

Some of the charges connected to a home:

Real estate taxes

Mortgage insurance

Homeowners insurance

are applied annually. The escrow account is a bucket where part of monthly mortgage payments accumulate to pay these costs.

Escrow account costs may — and usuallydo — change each year, because these charges change.

Its useful to understand that the lender is responsible for making those payments on time, from the escrow account. If somethings late, make sure you are not fined or punished.