I don't know what my escrow acct is for....?

In really really simple terms, please tell me why I have an escrow acct, after buying a house, and what is it used for? I pay the homeowner's insurance myself now, so that's not what it's for. Is it money set aside for future investments, like buying another house or getting a loan? We've owned the house for 10 yrs now. If we sell this house, what becomes of the escrow acct? Is it my money? If it's the bank's money, why is it my account??? Where did this come from in the first place??? Remember, please keep it simple. Thanks!

Simply, your escrow account is used to pay for:
-your real estate taxes
-your homeowner's insurance
-private mortgage insurance (PMI), if you have PMI.

The more detailed answer:
Your escrow account comes from part of your mortgage payment that you pay every month. (You pay for it each month.) The mortgage lender usually accumulates it on your behalf and then pays your real estate taxes, homeowner's insurance, and private mortgage insurance (PMI) out of the escrow account. (Private mortgage insurance does not benefit you in any way; it's just an extra fee the lender charges when you put less than 20% down on your house when you buy it.)

Being that you pay your homeowner's insurance yourself, your mortgage lender shouldn't be collecting for that at this time. Also, if you are 10 years into a 30-year (or 15-year) loan, you probably shouldn't still have PMI being charged because you should have more than 20% equity in your home.

Your mortgage lender should be able to tell you exactly what they are paying with the money they collect and put into escrow. All reputable ones that I have dealt with document on your monthly statement how much went to pay down your principle (which is how much you still owe on your house), how much went to pay them interest, and how much went to the escrow account. They should also be including on your monthly statement when they pay anything (such as your real estate taxes), and exactly what amount they paid and how much is in your escrow account.

And no, the money is not set aside for future investments in any capacity. If you sell the house, whatever is left in the escrow account will be returned to you, but realize the lender has been paying your real estate taxes every year (or every 6 months), so there probably isn't a huge amount of money in the escrow account. One more thing, the lender should be crediting you with (a small amount) of interest on the account by law periodically (usually every 3 months).

Call your lender. They should be able to explain all of this to you.

Good luck.

Since you pay your homeowner's insurance directly, your escrow account is probably your property taxes.

The estimated amount of your property taxes is divided by 12 and you pay that amount along with your monthly mortgage interest and principal payment. When the property taxes are due, the mortgage company takes the funds from the escrow account and pays them.

On an annual basis, your escrow account is analyzed. If it's short, your payment goes up. If there's an excess in the escrow, it's refunded to you and your payment is adjusted down.

If you sell the house, the escrow is prorated to cover the timeframe you had the house. Any extra would be refunded to you.

You might be able to pay your property taxes directly also. Sometimes mortgage companies insist on taxes thru an escrow account to make sure those taxes are paid.

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I don't know what my escrow acct is for....?

An escrow acct, after buying a house, is used for
Payment of Taxes, Insurance and in some cases Private Mortgage Insurance PMI
Is it money set aside for future investments No.
If we sell this house, what becomes of the escrow acct?
The escrow monies will be refunded to you after the mortgage is paid off.

Payments are broken up into three parts
1st Interest 2nd. Principle mortgage balance 3rd Escrow
Check your closing statement
Mocess