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Glossary Finance

Escrow

Escrow is an arrangement in which a neutral third party holds money or documents until the conditions of a transaction are met.

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In more detail

In a home purchase, escrow holds the deposit and paperwork until closing. After closing, many lenders also keep an escrow account into which part of each mortgage payment goes, to pay property tax and insurance bills when they fall due. That is why the monthly payment can change even on a fixed-rate loan.

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See also

  • Glossary Amortization
    Amortization is paying off a debt through regular instalments that each cover interest plus part of the principal.
  • Glossary Down payment
    A down payment is the part of a purchase price you pay upfront from your own money, with a loan covering the rest.
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