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So you’re at the point in the home buying process where you’re getting ready to get pre-approved for your home loan. As you go into the bank, they’re probably going to use some terms that you’re not familiar with at this point.

One of these is Private Mortgage Insurance, which we cover in another video here. Another word that bankers are going to use is Escrow.


Escrow is when you pay the lender a partial of your property taxes and your homeowner’s insurance, monthly with your regular mortgage payment.

That lender is going to then take those funds and distribute them to your homeowner’s insurance company in one big check, once a year, or to your property taxes, twice a year.


As you pay your mortgage payment with an Escrow, it will be referred to as PITI:

  • Principal
  • Interest
  • Taxes (Property Taxes)
  • Insurance (Homeowner’s Insurance)

If have a loan without an Escrow, you will just pay the P and I – principal and interest. This is the total amount you would pay your lender each month.

If you have an Escrow on the account, then you will be paying the full PITI, all compiled into your monthly payments. You make that one payment to the lender, and every month the lender accumulates that money and then disperses it as needed to your home owners insurance policy and your property taxes on your behalf.

Escrowing is going to be part of the equation for a lot of people who are going to be buying a new home, and hope that now when you go into that loan officer you’re a little bit more informed!

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