Escrow Fees: What They Cost And Who Pays Them

Jan 31, 2025

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An escrow fee is one of the many costs you’ll encounter on your path to homeownership or even when you're refinancing a home. Escrow fees are paid to an escrow or title company to hold funds when you close on your home.

There’s a lot to learn when you’re preparing to buy a home. Whether you’re buying your first home or your seventh, knowing the mortgage basics and how they affect your bottom line will help your confidence during the mortgage process.

We’ll break down escrow fees, what they include and how much you can expect to pay.

What Are Escrow Fees?

You’ll begin hearing about escrow and escrow fees as soon as your offer is accepted. Let’s examine the role of escrow fees and accounts both before you buy and over the life of your mortgage.

Before You Buy

Escrow fees are a portion of the closing costs that come with buying a home. These costs are paid directly to an escrow company, real estate attorney or title company to conduct the closing and distribute funds to the third parties involved in the real estate transaction. Escrow fees can cover paperwork, distribution of funds and other fees related to the real estate transaction.

After You Close

After closing and throughout the life of the loan, your lender may continue to collect money to fund your escrow account. This escrow account is used to pay your annual property taxes and homeowners insurance bills.

These fees are typically rolled into your monthly payment and may increase or decrease yearly based on whether an annual analysis finds an escrow shortage or surplus. There's no fee associated with the maintenance of the account.

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