An escrow balance is the amount of money a lender sets aside to pay for homeowners insurance, mortgage insurance, future interest, and property tax payments.  As most of these payments are often made on an annual or semi-annual basis, your lender will bundle all of these payments together in an escrow account to be paid alongside your monthly mortgage payment.  When you access your monthly mortgage statement, you will find your mortgage payments separated into three categories: Interest Payments Principal Payments Escrow Payments Unlike interest and principal, escrow payments don’t count toward the actual debt of your loan. Rather, escrow counts toward the auxiliary services and fees, such as insurance premiums and property taxes that must be paid under law.