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In a real estate closing, an escrow account consists of funds held by an escrow agent for disbursement to designated parties only when agreed-upon conditions have been met. Also, lenders often rquire that you set up an escrow account for the payment of real estate taxes, homeowner’s insurance, flood insurance, and private mortgage insurance. An intial amount is collected at closing to establish the account and additional funds are added to your monthly payment each month to fund the account. It is important to note that the establishment of escrow accounts and the payment of taxs and insurance premiums at closing often have a significant impact on the amount of funds the buyer will be required to bring at closing.