In addition to the principal and interest payment on your mortgage loan, you may elect to impound/escrow additional funds each month in an account to pay for property taxes and insurance. With some mortgage programs, impounding/escrowing for taxes and insurance may be required.

Having an impound/escrow account allows you to put aside a small portion each month toward the costs of insurance and property taxes. You send the additional funds each month when you make your mortgage payment. Lenders hold the money in an impound/escrow account and make the payments from the account when they are due.