Escrow is a type of account used to stash money for a home purchase. A third party holds the account on behalf of the parties negotiating a deal. Escrow is a financial account held by a third party on behalf of two other parties engaged in a transaction. The money is held until certain terms of the agreement — such as buying a home — are finalized.With real estate deals, you’ll encounter options to use escrow at two points — once when you’re buying the home and again with your mortgage payments.