Escrow Accounts: Why Your Lender Holds Your Money
2026-02-20 · 4 min read · Education
What Is Escrow?
An escrow account is where your lender collects and holds money for property taxes and homeowners insurance. Instead of paying these large bills annually, you pay 1/12th each month as part of your mortgage payment.
Your Monthly PITI Breakdown
Principal: Goes toward paying off your loan
Interest: The cost of borrowing
Taxes: Property tax escrow
Insurance: Homeowners insurance escrow
Escrow Shortages
If taxes or insurance increase, you may get an escrow shortage notice. Your monthly payment increases to cover the higher amounts. This is why your "fixed-rate" mortgage payment can still change.
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