Escrow account
An account your lender uses to collect and pay your property taxes and homeowners insurance. Part of each monthly payment goes into it. Bills get paid on your behalf when due.
Your Room opens on going under contract and closing, with the offer and everything before it already ticked.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.
See how it worksWhere this comes up: closing
Part 1 of 4
Why a seller cares
Your lender has been collecting for taxes and insurance every month, and there is usually money left in that account at payoff. It comes back to you after closing, separately from your proceeds.
Part 2 of 4
A simple example
Your escrow account holds $2,100 at closing. The lender refunds it by check a few weeks after the payoff posts.
| What is in the account | What happens to it |
|---|---|
| $2,100 collected for next year's taxes | Refunded to you after payoff, not at closing |
| An insurance premium the lender paid last month | Your insurer refunds the unused part once you cancel |
| A shortage | Rare at payoff; it is netted from the refund |
The escrow balance is your money, and it arrives a few weeks after the sale.
Part 3 of 4
What people get wrong
That the escrow account refund is part of the proceeds. It comes from the lender, later, and sellers often forget to expect it.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
In your Room, this word explains itself where it appears.
Your Room defines escrow account in the step you meet it in, beside the document or the date it belongs to. Free to set up, with an agent or on your own.
Organize my saleFree to set up. Pay once when you list: $89 or $189. 7-day refund.