Finance
A Florida borrower's 'impound account' (escrow account) held by the lender is used to:
AHold the earnest money deposit during the contract period
BCollect monthly installments for property taxes and insurance to ensure timely payment✓ Correct
CAccumulate the borrower's down payment
DHold closing cost funds prior to settlement
Explanation
An impound (escrow) account held by the lender collects portions of the borrower's monthly payment for property taxes and homeowners insurance. The lender pays these bills when due, ensuring the collateral is protected.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
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.
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.
Math Concepts
State-Specific Concepts
Escrow Disputes
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