An escrow account is where you can put money to ensure that your real estate taxes get paid on time. Escrow accounts may be managed by either a mortgage company or the homeowner himself. Putting money in escrow means to set money aside in this account for real estate taxes. Learn the pros and cons of who should manage an escrow account.
When you buy a home who pays the property taxes for your first year will depend on when you bought the home and where you bought it. In some cases buyers and sellers split the cost of property taxes. How much of the property taxes buyers and sellers pay may be determined by prorating the amount.
Escrow funds are designed to help the lender make sure the property owner pays all the necessary taxes. It's in the mortgage lender's interest to make sure your taxes and premiums get paid in full and on time. However, sometimes mistakes happen in the escrow process and sometimes lenders take advantage of the consumer.