What is Escrow?

Escrow is an account that is set up by your mortgage lender to pay certain property related expenses. In the case of Cayetano, escrow is used to pay for your property taxes once a year.

Instead of paying one large lump sum once a year, Cayetano collects a small amount each month and sets it aside in a dedicated account for you. When your annual property taxes are due, Cayetano uses the funds you’ve contributed throughout the year to pay the County on your behalf. If you end up paying in more than the final tax amount, the excess will be returned to you. If the amount set aside falls slightly short, you’ll only need to cover the remaining balance—usually a relatively small portion of the total bill, which can run more than $3,000.

It is typically advised that escrow accounts are used to pay these taxes, because paying the small amount once a month when your loan payment is due, is far easier and more sustainable than having to pay the lump sum.

For more resources on what escrow is, please check out the links below.

Resources:

What is an escrow or impound account? – Consumer Finance

How Does Escrow Work? – Texas Tax Protest

VIDEO: How to Pay Property Taxes with Escrow? – County Office Law