Mortgage Basics

Escrow Accounts Explained

How lenders collect and pay your taxes and insurance.

5 min readUpdated 2026Mortgage Basics

How escrow works

Your monthly payment often includes 1/12 of annual property taxes and insurance. The servicer holds those funds and pays the bills on your behalf.

Annual analysis

Once a year, the servicer reviews the account. If taxes or insurance rose, expect a shortage and higher monthly payment.

Florida-specific

With rising Florida insurance costs, escrow shortages have become more common. Budget accordingly.

Key takeaways

  • Escrow smooths tax and insurance costs.
  • Shortages happen when bills go up.

Frequently asked questions

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