August 10, 2026
An escrow account is a neutral, third-party account that holds money on behalf of a buyer and seller until the conditions to release it are met. When you buy a home in Staten Island or Brooklyn, the word "escrow" shows up twice: first as the earnest-money deposit held while you are under contract, and later as the mortgage escrow account your lender uses to pay your property taxes and homeowners insurance. Joseph Ranola, Team Leader of the Bridge and Boro Team at Real Broker LLC, explains both below so you know exactly where your money sits at every stage.
Fresh 2026 fact: The 30-year fixed mortgage rate averaged 6.69% for the week ending August 6, 2026, according to Freddie Mac — up from 6.66% the prior week and its highest level in about eleven months. Because your monthly mortgage escrow is added on top of principal and interest, a higher rate makes the full picture of your monthly payment matter more than ever for both Staten Island and Brooklyn buyers.
There are two escrow accounts in a typical New York City home purchase. The first is the contract escrow: when your offer is accepted, you sign a contract and put down an earnest-money deposit, usually about 10% of the purchase price in New York, which the seller’s attorney holds in an escrow account until closing. The second is the mortgage escrow, sometimes called an impound account: after you close, your lender collects roughly one-twelfth of your annual property taxes and homeowners insurance with each monthly payment and pays those bills for you when they come due. Both keep money in neutral hands so no one has to trust the other side to hold it.
In both boroughs the process is the same because New York City runs on attorney-driven contracts. After a verbal agreement, the seller’s attorney drafts the contract; your attorney reviews it, and you wire or check your deposit into the seller’s attorney’s escrow account when you sign. That money is not the seller’s yet — it sits in escrow and is credited toward your down payment at closing. If the deal falls apart for a reason your contract protects (a financing or inspection contingency, for example), the escrow deposit is returned to you. If you walk away without a contractual reason, the seller may be entitled to keep it. This is why Joseph Ranola insists buyers have a real estate attorney review every contingency before you sign.
If you’re buying on Staten Island: deposits on one- to three-family homes are typically held by the seller’s attorney, and Joseph Ranola makes sure your inspection and mortgage contingencies are written to protect that deposit — important on older housing stock where a boiler, roof, or oil tank can turn up in inspection.
If you’re buying in Brooklyn: co-op and condo purchases add a layer — your deposit is escrowed the same way, but the deal can also hinge on board approval or a managing-agent review, so the contract needs the right contingency language before your escrow money is at risk. Joseph Ranola coordinates with your attorney so nothing is left to chance.
Once you own the home, most lenders require a mortgage escrow account. Each month you pay principal, interest, and an escrow portion; the lender parks that escrow portion and uses it to pay your property-tax bill and homeowners-insurance premium on your behalf. Two practical effects follow. First, your monthly payment is larger than just principal and interest, so budget for the full number. Second, when your taxes or insurance premium rises, your lender recalculates the escrow and your monthly payment goes up — even if your interest rate is fixed. Lenders run an annual escrow analysis and will either refund a surplus or spread a shortage over the next year.
The mechanics are identical, but the dollar amounts differ because property taxes and insurance differ. Staten Island one- and two-family homes generally carry a full property-tax bill in the assessment, and coastal areas — the East Shore, South Beach, waterfront blocks — often require flood insurance, which the lender will escrow on top of standard homeowners insurance. In Brooklyn, condos are billed like individual homes for property tax while co-ops pay taxes through the building’s maintenance, which changes what your lender escrows. Newly built or recently sold homes can also see a tax reassessment that raises escrow the following year. Joseph Ranola flags these before you close so the payment does not surprise you.
Sometimes. Borrowers who put down 20% or more can often request to waive the mortgage escrow and pay taxes and insurance themselves, though some lenders charge a small fee for the privilege and government-backed loans like FHA and VA generally require escrow. Waiving escrow means more control and the chance to earn interest on the money, but it also means you must set aside thousands of dollars yourself and never miss a tax deadline. For most first-time and busy buyers, keeping the escrow is the safer choice. Joseph Ranola helps you weigh the trade-off against your down payment and cash flow.
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