Definition
An account your mortgage servicer maintains to pay property taxes and homeowners insurance, funded through your monthly payment. When taxes or premiums rise, the escrow portion of the payment rises too.
Why it matters
Escrow is why a fixed-rate mortgage payment still goes up. Understanding it prevents the annual surprise letter from reading like a rate hike.
Example
With $3,600 of annual property tax and $1,200 of insurance, about $400 rides along with each mortgage payment into escrow. When the county reassesses and taxes jump, the servicer recalculates and the payment rises.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.