What is an impound account?
Correct Answer
B) An account for collecting property taxes and insurance premiums
An impound account is another term for an escrow account, which is used to collect and hold funds for property taxes, homeowner's insurance, and sometimes other property-related expenses like mortgage insurance premiums.
Why This Is the Correct Answer
An impound account is another term for an escrow account, which is used to collect and hold funds for property taxes, homeowner's insurance, and sometimes other property-related expenses like mortgage insurance premiums.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
Under what circumstances can a Qualified Mortgage include a prepayment penalty?
A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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Previous Question
A property is valued at $400,000. The borrower is making a $60,000 down payment and obtaining a first mortgage of $300,000 and a second mortgage of $40,000. What is the CLTV ratio?
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