Definition

Escrow refers to money or documents held by a neutral third party. During a home purchase it holds the earnest deposit until closing; with a mortgage, an escrow account collects part of each payment to pay property taxes and insurance when due. It ensures these large bills are covered without a lump-sum surprise.

1. Mortgage

   A loan used to buy property, secured by the property itself.
2. Closing Costs

   The fees paid to finalize a home purchase or refinance, on top of the down payment.
3. Private Mortgage Insurance (PMI)

   Insurance lenders require when your down payment is under 20%, protecting them if you default.