A mortgage escrow account typically collects monthly payments from the borrower to cover which of the following?
Correct Answer
B) Property taxes and homeowner's insurance
Lenders typically require borrowers to make monthly escrow payments — collected alongside the principal and interest payment — to cover property taxes and homeowner's insurance. The lender holds these funds in an escrow (impound) account and pays the tax and insurance bills on the borrower's behalf when they come due, reducing the lender's risk of losing collateral to a tax lien or uninsured loss.
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