The portion of a mortgagors monthly payment that is held by the servicer to pay for taxes, hazard insurance, mortgage insurance, lease payments, and other items as they become due.

The servicer of the loan will usually collect a reserve for the escrowed taxes, at the inception of the loan. This is done so that in the event taxes are increased during the year, or at the start of the next year, the mortgagor will then have enough money in their escrow account to cover the increase. It acts as a cushion, so that the mortgagor does not have to come up with additional funds when taxes become due.

If you are refinancing your loan, you can expect to receive a refund of your escrow account in about 2-3 weeks after you close on your new loan.

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