Common Questions About Escrow

October 01, 2025 by First Federal Bank

 

Buying or selling a home often raises a lot of questions, especially when it comes to escrow. If you are new to the process, it can feel a little overwhelming.

At First Federal Bank, we want you to feel confident every step of the way. That is why we have put together answers to the five most common escrow questions we hear from customers.

 


1. What does it mean to be “in escrow”?

When you are “in escrow,” it simply means you are in the process of purchasing a home. Escrow begins when you make an offer and place your earnest money deposit, and it continues until the transaction is finalized at closing, which is typically a minimum of 30 days.

Your earnest money is placed in an escrow account, where it is safely held until all requirements of the sale are met. During this period, you will typically work with an escrow officer, attorney, or title company who manages the details.


2. What is an escrow account?

An escrow account works like a savings account, but it is managed by your loan servicer. When you close on your home, your lender may set up an escrow account to collect funds each month for property taxes, homeowners insurance, and mortgage insurance if required.

Instead of paying these large expenses in one lump sum, your servicer uses your escrow account to make payments on your behalf when they are due. It is a convenient way to stay on top of essential homeownership costs.


3. Do I set up escrow myself?

No. Escrow is managed by professionals such as a title company, attorney, or escrow agent. Buyers and sellers do not have to open or manage escrow themselves. It is part of the real estate transaction and closing process.


4. How much money will I need in escrow at closing?

That depends on your lender’s requirements. Often, you will be asked to deposit funds equal to two months of estimated property taxes, insurance, and mortgage insurance into your escrow account at closing.

In some cases, lenders may also require the first year of homeowners insurance to be paid in full upfront. Your lender will give you a detailed breakdown of what is needed so you can be prepared.


5. What if there is a mistake with my escrow account?

While your loan servicer is responsible for making timely payments from your escrow account, it is still important to stay proactive. Errors can happen, and as the homeowner, you are ultimately responsible for making sure taxes and insurance are paid on time.

Here are a few tips to help:

  • Double-check that the correct tax rate was used at closing.

  • Watch for math errors in your closing documents.

  • Learn your local property tax deadlines and rates by checking with your county assessor’s office.

  • Keep track of your insurance and tax due dates, and follow up with your servicer if something looks off.

  • Review your mortgage statement to see your escrow account balance and ensure enough funds are being set aside each month.


Need more answers?

These are just a few of the most common escrow questions, but every homeowner’s situation is unique. At First Federal Bank, we are here to help guide you through the process. If you have questions about escrow or any other part of homeownership, our team is only a call away.

Categories: Mortgages / Home Equity

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