What Is an Escrow Account in a Mortgage?

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What Is an Escrow Account in a Mortgage?

Why First-Time Homebuyers Should Understand Escrow Accounts

💡 Confused by the word “escrow”? You’re not alone. It sounds like complicated banker talk, but escrow is actually a simple and super helpful tool that protects your budget as a new homeowner. Once you understand how it works, you’ll wonder why anyone does it differently.

1. Escrow Is a Built-In Safety Net

Think of an escrow account like a holding tank set up by your lender. Instead of paying huge bills for property taxes and insurance once or twice a year, your lender collects smaller chunks each month — and holds that money in your escrow account until those bills are due. That means you’re covered without scrambling to come up with thousands at once.

2. It’s Funded Through Your Monthly Mortgage Payment

Every month when you make your mortgage payment, a portion goes toward your loan, and another portion is set aside in your escrow account. Then, when property taxes or homeowners insurance come due, your lender pays them directly. No missed due dates. No late fees. No surprises.

3. It Simplifies Your Budget and Reduces Stress

An escrow account is like autopilot for your housing expenses. Instead of juggling big bills and remembering tax deadlines, escrow keeps things simple, automated, and stress-free. It’s one more way Stairway Mortgage helps first-time homebuyers plan smart and feel supported every step of the way.

Let’s Make Your First Home Purchase Stress-Free

Want to understand every piece of the homebuying puzzle — including escrow accounts, taxes, and insurance?
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