Escrow account

An neutral account that holds a sum of money, usually until a specific transaction is completed

Lenders often set up a type of escrow account, called an impound account, for you to prepay certain recurring costs: your first 6 months of property taxes, your first 2 months of hazard insurance and your first 2 months of mortgage insurance, if required.

You then pay these bills monthly through this account. Some lenders let you waive the account, but may tack on additional points to your closing costs if you choose to not have one.