Escrow
In a mortgage context, money the servicer collects and holds monthly to pay your property taxes and homeowners insurance when those bills come due.
On a mortgage, escrow is money the loan servicer collects each month, in addition to principal and interest, and holds to pay the property taxes and homeowners insurance premiums when those bills come due. It is not part of the loan itself; it is a holding account with your name on it, administered by the servicer on your behalf.
Once a year the servicer runs an escrow analysis. If taxes or insurance have risen, the monthly escrow portion rises to match, and the total mortgage payment goes up. This is how a "fixed" mortgage payment changes anyway — the fixed part is principal and interest; escrow moves with the outside bills it is paying.
Escrow can also refer, more generally, to any third-party holding of funds — for instance, an earnest money deposit held during a home purchase — but the mortgage sense is the one most homeowners encounter each month.
Plumb is financial education, not financial, investment, tax, or legal advice.