When you take out a mortgage from a bank or lender, they will also set up an escrow account for you. This account is used to pay your property taxes and homeowner’s insurance premiums on time, every year. Even though these costs are annual, your lender will require you to pay a monthly amount towards each cost. This way, the balance accumulates in your escrow account and ensures that these expenses get paid on time. Some, mortgage lenders require borrower escrow accounts because it minimizes the risk of falling short of financial obligations as a homeowner. In a foreclosure, unpaid taxes or insurance can result in liens against the property. This makes it harder for the mortgage lender to recover the original loan.