Escrow is an account set up by your lender through which you can pay your property taxes and insurance premiums. Under these escrow arrangements, you pay extra with each mortgage payment, and your lender deposits these extra dollars in an escrow account. When your property taxes and homeowners insurance bills are due, your lender uses the funds in this account to pay them on your behalf.
In this way, property taxes affect your mortgage payments, making them higher than they would be if you didn't escrow your taxes and insurance. Escrow arrangements, though, can reduce the risk of you missing your property tax payments, and even if you pay your property taxes through an escrow account, you can still deduct them on your income taxes.