Buyers : What is an Impound Account?

What is an Impound Account?

An impound account is a trust account established by the lender to hold money to pay for real estate taxes, and mortgage and homeowners insurance premiums as they are received each month. The advantage is that you will not have to come up with the money when taxes and insurance are due, since it will be included in your monthly payment. The disadvantage is that they hold your money in an account until the taxes and insurance are due. If you are responsible with managing your finances, then save the extra money in an interest bearing savings account.