Escrow

A separate account held by the lender to pay property taxes and homeowner's insurance from monthly mortgage payments.

An escrow account is held and managed by your mortgage servicer to collect monthly amounts toward property taxes and homeowner's insurance, then pay those bills when due. Required for FHA, VA, and most conventional loans below 20% equity. Escrow analysis is performed annually to adjust the monthly amount based on actual tax/insurance amounts. "Escrow waiver" is sometimes available at higher equity to let borrowers pay taxes/insurance directly.