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An initial escrow deposit is the amount that you will pay at closing to start your escrow account, if required by your lender. This initial amount may be different from what you pay monthly to maintain the escrow account.
The lender may require that borrower put money into the account, known as the escrow's reserve. The reserve figure may be the minimum amount the lender requires in the account for the duration of the loan. Escrow reserves are not a prepaid finance charge because the money doesn't affect the loan's APR. A borrower who declines an escrow might have to pay an escrow waiver fee, which is considered a prepaid finance charge if the lender includes the fee in the APR calculation, reports the website My Equity Pro.