In a mortgage loan, an escrow impound account is typically used to collect monthly payments for:
Correct Answer
B) Property taxes and homeowner's insurance premiums
A mortgage escrow impound account collects a portion of the borrower's monthly payment to cover property taxes and homeowner's insurance premiums. The lender holds these funds and pays the bills on the borrower's behalf when they come due, ensuring these obligations are met and protecting the lender's collateral interest in the property.
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Related Concepts
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
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