California Real Estate Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Study for the California Real Estate Exam with confidence. Engage with interactive questions designed to enhance your understanding of real estate principles, laws, and practices. Prepare thoroughly for your licensing test and ensure you have the knowledge to succeed in your real estate career!

Practice this question and more.

What is an impound account used for by a mortgage lender?

To store extra interest payments
To hold money for future repairs
To cover taxes and hazard insurance costs for the property
To collect late payment fees

The correct answer is: To cover taxes and hazard insurance costs for the property

An impound account, also known as an escrow account, is used by a mortgage lender to collect funds for taxes and insurance costs for the property. This is so that the lender can make sure these important expenses are paid on time. Option A is incorrect because an impound account is not used for storing extra interest payments. Option B is incorrect as well because it is not used for holding money for future repairs. Lastly, option D is incorrect because an impound account is not used to collect late payment fees.