Finance
An impound (escrow) account on a Utah mortgage loan is used to:
AHold the buyer's earnest money until closing
BCollect monthly amounts for property taxes and insurance, paid by the lender when due✓ Correct
CInvest the borrower's extra payments
DGuarantee the loan balance
Explanation
Lenders often require impound (escrow) accounts to collect 1/12 of annual property taxes and insurance premiums with each mortgage payment, ensuring these are paid on time to protect the lender's collateral.
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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.
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.
Math Concepts
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