Escrow, Property Taxes, and Homeowners Insurance: A Payment Guide
Many borrowers first compare mortgages using only principal and interest. The full monthly housing payment can also include property taxes, homeowners' insurance, mortgage insurance, and HOA dues. Escrow is the account or payment arrangement used by many lenders to collect certain recurring property costs. What escrow usually covers A lender may collect money each month for property taxes and homeowners insurance, then pay those bills when they are due. The exact items and rules depend on the loan and location. HOA dues are often paid directly to the association rather than through mortgage escrow. Escrow does not make taxes or insurance free. It changes the timing of the payments and can make the monthly mortgage bill more predictable. Why the amount can change Property taxes can change after an assessment, reassessment, exemption change, or local rate change. Insurance premiums can change after a renewal, coverage change, claim history change, or market adjustment. When the expec...