An escrow account is an account your mortgage lender maintains to collect and pay certain property-related expenses on your behalf. Each month, a portion of your mortgage payment is deposited into the account to cover items such as property taxes and homeowners insurance. When those bills come due, your lender pays them using the funds in the escrow account.
Not every mortgage requires an escrow account, but many loan programs do, especially when the down payment is small.
If your mortgage is paid off or your home is sold, any remaining balance in your escrow account is typically refunded to you after any outstanding bills have been paid.