What is escrow in mortgage lending and what items are typically escrowed?

What is escrow in mortgage lending and what items are typically escrowed?

• A. Principal and interest payments only.
• B. Property taxes and homeowners insurance, and sometimes HOA or special assessments.
• C. Appraisal fees and credit reports.
• D. Title insurance and recording fees.

Answer: (B)

Escrow in mortgage lending is an account the lender sets up to collect and hold funds for recurring housing expenses so they’re paid on time. By adding a little to each mortgage payment, the borrower funds taxes and insurance when due, helping protect the lender’s security and the borrower’s timely obligations. The typical items placed in escrow are property taxes and homeowners insurance, and sometimes HOA dues or special assessments if the lender requires it. Appraisal fees, credit reports, title insurance, and recording fees are usually one-time closing costs paid at settlement and aren’t kept in escrow for ongoing payments.

Escrow in mortgage lending is an account the lender sets up to collect and hold funds for recurring housing expenses so they’re paid on time. By adding a little to each mortgage payment, the borrower funds taxes and insurance when due, helping protect the lender’s security and the borrower’s timely obligations. The typical items placed in escrow are property taxes and homeowners insurance, and sometimes HOA dues or special assessments if the lender requires it. Appraisal fees, credit reports, title insurance, and recording fees are usually one-time closing costs paid at settlement and aren’t kept in escrow for ongoing payments.