General Mortgage KnowledgeQuestion 121 of 400
What is the main purpose of an escrow (impound) account on a mortgage?
a.To collect and pay property taxes and insurance
b.To hold the borrower's down payment
c.To pay the loan officer's commission
d.To reduce the interest rate
Explanation
An escrow/impound account collects a portion of taxes and insurance each month so the servicer can pay those bills when due. It is not for the down payment, commissions, or lowering the rate.
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