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An escrow account is defined as a separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.
Escrow account is where funds are held by a third party for future use by the borrower; funds are for special purposes and may be paid out or returned to the borrower only under certain conditions.
With mortgages, monthly house payments may include payments for insurance and taxes that are placed in a special account to meet those obligations.
