A. An escrow account is an amount of money maintained by your bank with whom you have taken out a loan to pay the annual taxes and insurance on a mortgaged property. Approximately 1/12 of the estimated annual cost of taxes and insurance is paid into the account each month from the borrower’s monthly mortgage payment. The bank will then pay the taxes and insurance from this account when they are due. An escrow account is required by many banks to ensure that the taxes and insurance premiums are paid on time. They have to protect their investment and basically don’t trust that you will make these payments as required.
