Mortgage Impound Account

Posted on November 24, 2010


An Impound Account is held by the mortgagee to advance payments for property tax, insurance for the collateral property on the mortgage loan. The mortgage includes these funds, which are automatically sent by the bank to the government, to avoid the property being seized for non payment of taxes.
An ESCROW impound account, usually a deposit of six months worth of property tax and insurance payments, is set up by the bank to ensure future expenses will be covered. The escrow impound account will pay your property taxes and insurance by collecting  one months property taxes with the mortgage payment.
Because property taxes are often increased yearly, it is important to have a reserve in the account just in case there is  a possible shortfall.
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