Mortgage impounds.

If you make a minimum down payment, you may be required
to deposit funds into an impound account. Funds in this
account are your funds, and the lender uses them to make
the payments on your homeowner's insurance, property
taxes, and mortgage insurance (whichever is applicable).
Each month, in addition to your mortgage payment, you
provide additional funds which are deposited into your
impound account.

The lender's goal is to always have sufficient funds to pay
your bills as they come due. Sometimes impound accounts
are not required, but borrowers request one voluntarily. A few
lenders even offer to reduce your loan origination fee if you
obtain an impound account. However, if you are disciplined
about paying your bills and an impound account is not
required, you can probably earn a better rate of return by
putting the funds into a savings account. Impound accounts
are sometimes referred to as escrow accounts.

Homeowners Insurance Impounds - your lender will divide
your annual premium by twelve to come up with an estimated
monthly amount for you to pay into your impound account.
Since a lender is allowed to keep two months of reserves in
your account, you will have to deposit two months into the
impound account to start it up.

Property Tax Impounds - How much you will have to deposit
towards taxes to start up your impound account varies
according to when you close your real estate transaction. For
example, you may close in November and property taxes are
due in December. Your deposit would be higher than for
someone closing in May.