What is an escrow account, and do I need one?
Escrow Account: An escrow account is when part of your monthly loan payment is allocated to cover costs associated with home ownership. Costs may include real estate taxes, insurance premiums and private mortgage insurance (PMI).
An escrow account does not cover regular living expenses like utilities. It also does not cover Homeowner Association (HOA) fees/dues, although they are used to calculate your debt to income when applying for a loan.
Do I Need One?
An escrow account is not required for all borrowers. However, having an escrow account may help you get the best rate and ensures that all payments to third party companies are paid on time.