Escrow means a neutral third party holds money or documents until both sides of a deal hold up their end. In mortgages you'll meet it twice.
First, during the purchase: your earnest money deposit sits in escrow so neither you nor the seller can touch it until closing. If the deal closes, it's applied to your costs; if it collapses under a covered contingency, you get it back.
Second — and this is the one you'll live with — the escrow account attached to your mortgage. Each month your lender collects a slice of your annual property tax and homeowners insurance bills along with your payment, parks it in escrow, then pays those bills for you when they come due. It's why your real monthly payment is bigger than just principal and interest.
Escrow accounts get re-analyzed yearly, so your payment can drift even on a fixed-rate loan when taxes or insurance rise. See how they shape the full payment picture in our escrow guide.