Definition of Escrow:
Orange County, California Escrow:
Escrow is where an item of value, money, or documents are deposited with a neutral third party to be delivered upon the fulfillment of a condition. For example, the earnest money deposit is put into escrow until delivered to the seller when the transaction is closed. If the lender requires that the account be “impounded” or if the borrower would prefer that their taxes be “impounded” the lender will set up and escrow account.
Escrow Account: Once an Orange County buyer closes their purchase transaction, they may have an escrow account or impound account with their lender. This means the amount they pay each month includes an amount above what would be required if you were only paying their principal and interest (PI). The extra money is held in their impound account (escrow account) for the payment of items like property taxes (PT) and homeowner's insurance (I) when they come due. The lender pays them with the buyer’s money instead of you them paying it.
Escrow Analysis: Once each year the lender will perform an "escrow analysis" to make sure they are collecting the correct amount of money for the anticipated expenditures.