Escrow appears in many property transactions but means different things to different people. In home purchases, an escrow account often collects part of your monthly payment to cover property taxes and insurance so the lender can pay them on schedule. Separate escrow for the sale itself is a neutral third-party holding funds until closing conditions are satisfied. These mechanisms reduce the buyer’s administrative burden and ensure required payments are made. Understanding escrow protects you from surprise bills and clarifies why monthly payments might include non-loan amounts.