Definition
Escrow is an account or process used to hold money for specific housing costs, often property taxes and insurance.
If you are comparing mortgage options, treat escrow as one piece of the total cost and risk picture, not a standalone detail.
Why It Matters
Escrow matters because it can make the monthly payment include more than principal and interest.
Simple Example
A lender may collect one-twelfth of annual taxes and insurance each month and pay those bills when due.
How to Use This Term
When you see escrow on a loan estimate, calculator result, or lender conversation, connect it to three practical questions: how it affects monthly payment, how it affects cash needed now, and how it affects flexibility later.