The full explanation
That is why your payment is higher than principal and interest alone, and why it can change when taxes or the insurance premium go up. In some states the word also names the period between the offer and the closing.
An example
Ana's payment includes an escrow portion. When the county raises the property tax, her servicer recalculates the account and her monthly payment goes up a little.
With real numbers
Computed with official data for the whole U.S. In your county the numbers may differ.
- Typical tax per year
- $3,119
- Per month in your escrow
- $260
If your lender collects property tax through escrow, with the typical U.S. tax ($3,119 a year) each monthly payment would carry about $260 for that tax alone. Home insurance is added on top.
Computed with: American Community Survey (ACS) 5-year estimates (2020–2024)
You will see it in…
- The Loan Estimate (“Estimated Escrow”) and the Closing Disclosure, section G
- The annual escrow statement your servicer sends
- Our mortgage calculator, under taxes and insurance
