An escrow account is established to hold money collected by your lender to pay your hazard insurance and property taxes when they become due. This is sometimes called an "impound account.
Lenders usually require escrow payments every month to ensure that they have enough to pay the insurance and taxes for you. This is a way for lenders to make sure their collateral is secure.
For instance, if your home were to burn down in a fire and you had failed to pay your hazard insurance premium; the lender would not be able to recoup the loss. In addition, if you fail to pay your property taxes, the government can foreclose on your property.
Insurance and taxes vary. You can find out the current taxes from the seller and seek quotes for hazard insurance coverage.