Escrow is a way to help both the homeowner and lender pay bills on time. Escrow accounts are typically set up by the lender, with monthly deposits taken from your monthly loan payment to help pay for items such as property taxes, mortgage insurance payments, fire and hazard insurance premiums and other items. Having your lender pay for such items — on their different payment due dates — removes the risk of not having these bills paid on time, which could ultimately lead to foreclosure on your property. Escrow also helps you budget for these items, as the amounts are typically spread out over 12 months of the year. 

Not all lenders escrow for their borrowers. You need to verify with your lender that escrow items are included in your monthly loan payment. If not, you'll need to be aware of all the bills that will be due, how much they are and make necessary adjustments to your budget. That might mean setting aside enough each month to cover such expenses, or being sure you have enough in a savings or other account to pay the bills in full when they come due.