A Colorado buyer's lender requires 'escrow' (impound account) for property taxes and insurance. This means:
Why The buyer makes monthly payments to the lender that include 1/12 of annual taxes and insurance premiums Is Correct
Answer B: The buyer makes monthly payments to the lender that include 1/12 of annual taxes and insurance premiums
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 Colorado Questions
- A buyer's monthly principal and interest payment is $1,850. Annual property taxes are $3,600 and homeowners insurance is $1,200 annually. What is the total monthly PITI payment?Real Estate Math
- A Colorado buyer wants to qualify for a $320,000 mortgage. The lender requires a maximum front-end ratio of 28%. The monthly payment (PITI) is $2,100. What minimum monthly gross income is required?Real Estate Math
- A Colorado borrower obtains a 30-year fixed-rate mortgage for $300,000 at 7% interest. The monthly principal and interest payment is approximately $1,996. What is the total interest paid over 30 years?Finance
- A Colorado property is worth $420,000. The owner takes a mortgage for 75% of the value. Monthly P&I payments are $2,150 and monthly property taxes and insurance are $425. What is the total monthly PITI payment?Real Estate Math
- A Colorado borrower obtains a $300,000 loan at 6% annual interest, interest only. What is the monthly interest payment?Finance
- A Colorado home has a $280,000 loan at 5% annual interest. The first monthly payment is entirely interest only. What is the first month's interest payment?Real Estate Math
- A Colorado lender offers a 30-year fixed-rate mortgage. 'Fixed-rate' means:Finance
- In Colorado, 'title insurance' premiums are typically paid:Escrow & Title
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.
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.
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.
Study This Topic
Practice More Colorado Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Colorado Quiz →