Mortgage Hack #7
An escrow account is an account that is used to collect annual expenses like property taxes and homeowners' insurance on a monthly basis. To ensure that the borrower has the money to pay the property taxes when they are due, banks frequently require borrowers to establish an escrow account at closing. However, many banks would let the borrower terminate escrowing after a period of flawless payment history. The monthly payment decreases at that point, while the borrower is still in charge of paying the taxes and insurance at the end of the year.
If the borrower is confident in their ability to plan for taxes and insurance, they may decide not to open an escrow account at closing and instead start paying their regular payments right away.
Reference: 2022 Keller Mortgage LLC