An escrow account held by a mortgage lender typically collects monthly payments for which of the following?
Correct Answer
B) Property taxes and homeowner's insurance premiums
A lender-held escrow account collects one-twelfth of the borrower's annual property taxes and homeowner's insurance premiums each month along with the mortgage payment. The lender then pays these bills on the borrower's behalf when they come due, ensuring the property remains protected and tax obligations are met. In Mississippi, lenders commonly require escrow accounts for loans with higher loan-to-value ratios.
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Related Topics & Key Terms
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Key Terms:
Related Concepts
TILA is a federal law that requires lenders to disclose the true cost of credit to borrowers, including the annual percentage rate (APR), total finance charges, and loan terms. It is implemented by Regulation Z.
A trustee sale is a type of foreclosure where a trustee, appointed under a deed of trust, sells the property at auction to satisfy the debt.
Usury is the practice of charging an interest rate that exceeds the maximum rate permitted by state law. Usury laws protect borrowers from excessive interest charges on loans.
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