Under RESPA (Real Estate Settlement Procedures Act), a lender may require the borrower to establish an escrow account for:
Why Property taxes and hazard insurance Is Correct
Answer B: Property taxes and hazard insurance
Exam Tip: Finance
Finance questions often involve calculations. Master the T-bar method, understand the difference between conventional and government-backed loans, and know key ratios like LTV and DTI.
Key Finance Terms in This Question
People Also Study
Related Alaska Questions
- The primary purpose of an escrow account (impound account) held by a lender is to:Finance
- A buyer's monthly principal and interest payment is $1,850. Annual property taxes are $3,600 and homeowner's insurance is $1,200 per year. What is the buyer's total PITI monthly payment?Real Estate Math
- What is the primary purpose of the Real Estate Settlement Procedures Act (RESPA)?Finance
- The Real Estate Settlement Procedures Act (RESPA) prohibits:Escrow & Title
- A borrower obtains a 30-year, $240,000 mortgage at 7% annual interest. The monthly payment factor is $6.65 per $1,000 borrowed. What is the approximate monthly payment?Real Estate Math
- RESPA (Real Estate Settlement Procedures Act) prohibits:Escrow & Title
- Which federal law prohibits lenders from requiring a borrower to use a specific title company or settlement service provider as a condition of the loan?Finance
- Which type of mortgage clause allows a lender to accelerate the entire loan balance when the borrower defaults?Finance
Key Terms to Know
A neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Study This Topic
Practice More Alaska Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Alaska Quiz →