In real estate finance, an Impound Account, also known as an escrow account, is an account held by a lender to collect and pay certain recurring expenses related to a property. These expenses commonly include property taxes, hazard insurance premiums, and sometimes mortgage insurance.
The borrower makes regular deposits into the impound account as part of their monthly loan payment. The lender then uses the funds to pay the obligations when they come due, helping ensure that taxes and insurance are kept current and that the lender’s security interest in the property is protected.
