Escrow means two different things in a home purchase, and most of the confusion comes from mixing them up. The first escrow handles your closing. A neutral third party holds the funds and documents (your deposit, the loan proceeds, the signed deed) and makes sure everything comes together correctly before ownership transfers to you. Once the deal closes, that escrow's job is done. The second is an escrow impound account, often just called impounds. Your servicer collects a slice of each monthly mortgage payment and sets it aside to pay your property taxes and homeowners insurance when those bills come due. When a payment jumps, an impound shortfall is usually the reason: the servicer collected too little for a tax or insurance bill and has to catch up. So when a lender mentions your escrow going up, they almost always mean the impound account, since the closing escrow ended the day you got the keys. Same word, two very different jobs, and knowing which one someone means clears up most of the confusion.