Finance
In Indiana mortgage transactions, an escrow account held by the lender typically pays for:
AHomeowner's insurance and property taxes✓ Correct
BHOA dues and utilities
CMaintenance and repairs
DFlood insurance only
Explanation
Lenders often require an escrow (impound) account for property taxes and homeowner's insurance to ensure these critical bills are paid. The lender collects 1/12 of the annual amount with each mortgage payment.
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Key Terms to Know
Escrow
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.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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