What is an escrow account and why do I need it?

You’ve probably heard the terms “escrow” and “escrow account”- but what exactly are these? “Escrow” and “escrow accounts” are two different things.

Escrow is the process by which a neutral third party mediates a real estate deal, holding money and property “in escrow” until the two sides agree that all the conditions are met for a sale to close.

However, an escrow account is usually an account that helps to manage a mortgage borrower’s annual tax and insurance costs.