ELI5: Escrow. I get that I need 15 months of tax and homeowner’s insurance at closing, but why?

Backstory: In 2010, I refi'd because my old mortgage company had nearly $2K of my money left in escrow after my homeowner's insurance and taxes were paid. I refi'd and got a bank that will let me pay my own taxes and insurance.

I am now in a purchase agreement on another house and am faced with bringing 15 months of homeowner's insurance and tax to the table for closing.

So, the lender sets up escrow with more money than what a year's worth of insurance and taxes are. Then I have to pay insurance and tax each month in addition to my principle and interest each month.

I will be back in the same boat that I was in when I was fed up and refi'd.

Please explain to me how this makes sense for anyone other than the lender because it appears that they get to float or re-invest my money by seemingly collecting my taxes and homeowner's insurance twice (once at closing, then 1/12th each month).

What is the reasoning behind collecting 15 months of taxes and insurance at closing, and then paying taxes and insurance each month with my house note?

More real estate tips at Program Realty Wix site

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