Mortgage escrow refers to the amount of money that the lender has set aside for taxes and insurance, and the escrow is added on top of the principal and interest for each monthly payment. Discover the importance of an escrow account with tips from a mortgage broker in this free video on mortgage loans.
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Hi this is Matt McKillen with Innovative Financial Group. The question that's been posed to me today is define mortgage escrow. The escrow portion of your mortgage payment is basically the amount that's set aside by your lender for your taxes and your insurance. Sometimes there may also be a portion of your payment for what's called PMI or Private Mortgage Insurance. To give you an example, if you have a 100,000 dollar loan at let's say 6%, probably your actual principal and interest payment of your mortgage is only maybe 550 dollars, but your payment might be 800 dollars. So the difference between the 550 and the 800 is the amount held in reserve by your bank to pay your property taxes every 12 months also to pay your homeowners insurance when it comes due every 12 months and again, sometimes there may also be PMI insurance built into your escrow in case you financed your mortgage at higher then 80% LTV. Again my name is Matt McKillen, I'm with Innovative Financial Group. If you'd like to get information from me directly, just e-mail me at email@example.com.