Escrow and Impound Accounts for Sacramento Region Homeowners

In California, "escrow" usually means the neutral company that handles your closing. Escrow holds the buyer's deposit and the loan money. It collects the signed documents, pays off the seller's old loan, pays the closing costs and releases the money once every condition in the contract is met.

Escrow follows written instructions that the buyer and seller both sign. It doesn't take sides. When people say "we're in escrow," they mean the contract is signed and this process is under way.

Sometimes. California Civil Code section 2954 generally limits when a lender can require an impound account on an owner-occupied, single-family home. It lists exceptions, including loans insured or guaranteed by a government agency, loans of 90% or more of the price or appraised value, and cases where all loans on the home add up to more than 80% of its value. Lenders and loan programs also set their own rules.

If you waive impounds, you pay your property tax and insurance bills yourself. The CFPB warns that unpaid property taxes can lead to penalties, a tax lien or even foreclosure, and a lender can buy costlier insurance for you if yours lapses. Waiving can work well if you're organized and keep the cash set aside. Ask whether waiving changes your loan pricing before you decide.

This one surprises many new owners. In California, a home is reassessed when it changes ownership or new construction is finished. If the new value is higher than the value on the roll from January 1, the county sends a supplemental tax bill for the difference, prorated for the rest of the fiscal year.

Here's the catch. The Sacramento County Department of Finance (checked October 22, 2026) says supplemental bills are not mailed to your lender, and that your lender may not pay them even if you have an impound account. Watch your mail in the months after you close, and call your servicer when one arrives so they know it's separate from the regular annual bill.

Use our Sacramento property tax calculator to estimate yours. If the home is your main residence, also ask the County Assessor about filing for the Homeowners' Exemption.

In some parts of California, homeowners insurance can take longer to line up than buyers expect. Your lender will need proof of insurance before closing, so start shopping as soon as you're in contract.

If you can't get a policy from a regular insurer, the California FAIR Plan exists for that situation. The California Department of Insurance says (FAIR Plan page, checked October 22, 2026) that its current residential policy is limited to fire. Other coverage, like water damage, theft and liability, comes from a separate Difference in Conditions policy sold by private insurers. The Department says a broader FAIR Plan option is still in progress.

The Department suggests shopping the regular market first and working with a licensed insurance broker. Ask your lender early whether a FAIR Plan plus Difference in Conditions setup will meet its requirements.