An escrow/reserve and/or impound account is an account set up at closing for the future payment of your property taxes and homeowners insurance. Once your account is set up, you will make 1/12th of your yearly tax and insurance payment with your regular mortgage payment. Your lender will then pay your yearly insurance premium and annual or semi-annual tax payment. Generally, three months reserves are collected at closing to set up the account. This protects your lender in the event you stop paying your mortgage as they will have reserves to keep your property taxes and homeowner’s insurance current.