Escrow accounts are set up for home owners to manage their budgets because large property tax bills are due infrequently. The escrow accounts builds a reserve to pay these bills by collecting from the homeowner on a monthly basis.
These escrow accounts are managed by lenders. Mortgage lenders will sometimes require homeowners to fund the escrow account for paying off homeowners insurance and property taxes. It protects the lender from having to pay off your homeowners insurance and property taxes if they are forced to take ownership of the home when a homeowner defaults on mortgage payments.
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