A monthly payment to the lender is necessary for a mortgage loan to be repaid by the borrower. The principal of the loan as well as interest on the balance due are repaid each month. Loan payments are amortized, so your monthly payment won't change throughout the repayment period, but as the principal balance on the loan decreases, a larger portion of the payment will go toward principal. Escrows are pre-payments of property taxes, homeowners insurance, and monthly homeowners association dues into an escrow account, which is managed by your lender. Escrows can be included in mortgage payments. Your lender pays the appropriate taxing body, insurance provider, or homeowners association when those obligations are due.
