How to Open an Escrow Account After Closing

Having an escrow account means never having to say you're sorry for missing an insurance bill or a property tax payment. Which means that you and your mortgage lender can remain locked in your loving embrace forever -- or something like that. Many lenders require you to open an escrow account as a condition of closing because paying the tax bills and home insurance bills protects their collateral -- your house -- from tax liens or disasters. Setting up the account is easy -- you sign the appropriate forms and provide two to four months of advance payments. Even if it wasn’t required, you can still set up an escrow account after closing. The process is the same; just the timing is different.

Contact your taxing authority for a copy of your tax bill or your insurance company for a copy of your insurance premium. Divide each yearly total by 12 to give you an idea of what you’ll pay into the escrow account each month.

Contact your bank and request to set up an escrow account. Indicate whether you want to escrow for taxes, insurance or both.

Submit the tax or insurance bills to the bank. It will use this information to set up the account.

Complete any relevant documentation. This will vary by bank, but will usually involve an escrow agreement. This document authorizes the bank to make payments directly to your insurance company or taxing authority. It also authorizes the bank to contact either to request copies of your bill or policy.

Fund the account. The bank, depending on its policy, will request two to four months worth of payments to start the account. This means if your monthly tax bill is $500, you will have to pay the bank between $1,000 and $2,000 to set up the account.


  • If your tax or insurance payments go up or down, your payments will change along with them.


  • Some lenders may escrow for taxes, but not insurance, or vice versa.

About the Author

Carl Carabelli has been writing in various capacities for more than 15 years. He has utilized his creative writing skills to enhance his other ventures such as financial analysis, copywriting and contributing various articles and opinion pieces. Carabelli earned a bachelor's degree in communications from Seton Hall and has worked in banking, notably commercial lending, since 2001.