You typically get your old escrow balance back as a refund a few weeks after payoff, rather than cashing it out into the new loan. A refinance often moves you to a different servicer, so the old impound account gets closed out and the balance mailed back to you. But you do have choices in the mechanics: - The old impound balance can sometimes help offset the payoff of the old loan. - You can bring extra cash to closing so the new loan balance doesn't grow. - You can roll the new prepaid items and initial escrow into the new loan instead. Which route is best depends on your goal. We've had a borrower who preferred to bring money in so her VA IRRRL balance wouldn't creep up, and another who chose to skip a payment or two and take roughly $18,000 back from their old impound account rather than reduce the new balance. Neither is wrong. It's a cash-flow-versus-loan-balance tradeoff. The money in your old escrow account is yours either way. Ask your loan officer to show you both versions, refund back to you versus applied against the new balance, before you sign, and pick the one that fits your plan.