In Texas the closing is often at a title company. Taxes here are high enough that the escrow deposit at closing surprises people who only budgeted the down payment. The Closing Disclosure lists it.
Closing
What escrow means
Escrow is two ideas. An escrow account collects property taxes and insurance with your payment. Escrow, the closing process, is the neutral party that holds money and deeds until the sale is finished.
Questions
Straight answers
Can I skip escrow?
Sometimes on conventional loans with enough equity, if the lender agrees. FHA and VA usually require it. You are still responsible for the tax bill.
Why did my payment change?
Escrow is re-analyzed once a year. If taxes or insurance rose, the payment rises. That is not a rate change.
Who holds the money at closing?
The title or escrow company, not the loan officer.
What is an escrow shortage?
The account does not have enough for the next tax or insurance bill. You can pay it in a lump or spread it over the year.
Does escrow earn me interest?
Usually no, or only where state law requires it.
Is earnest money escrow?
Earnest money is held in escrow until closing, when it is credited toward what you owe.
Reviewed by Patrick Crawford, NMLS #231625 · Last updated October 28, 2026