Finance
A Colorado buyer's lender requires 'escrow' (impound account) for property taxes and insurance. This means:
AThe buyer deposits tax and insurance funds with the title company at closing
BThe buyer makes monthly payments to the lender that include 1/12 of annual taxes and insurance premiums✓ Correct
CThe lender pays the property taxes directly from mortgage payments without the buyer's knowledge
DThe buyer must pre-pay 3 years of taxes and insurance at closing
Explanation
An escrow/impound account collects 1/12 of the estimated annual property taxes and insurance premiums with each monthly mortgage payment. The lender then pays these bills when due, ensuring they are paid on time and protecting the lender's collateral.
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