Origination ActivitiesQuestion 281 of 400
A borrower assumes their monthly payment on a loan with an escrow account is fixed forever. Why might the escrow portion change over time?
a.Because the loan principal is recalculated monthly
b.Because the interest rate on a fixed loan changes yearly
c.Because property taxes and insurance premiums can rise or fall, changing the required escrow amount
d.Because the lender adds new discount points annually
Explanation
Even on a fixed-rate loan, the escrow portion of the payment can change because property taxes and insurance premiums vary over time. Lenders perform an annual escrow analysis and adjust the monthly escrow to cover the new amounts, which changes the total payment.
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