New Jersey Real Estate Exam Practice Question
An escrow or trust account is often held by a lender to pay
Correct Answer: D
Rationale: An escrow or trust account is primarily used to manage funds for property taxes and insurance payments, ensuring these obligations are met on behalf of the homeowner. This prevents lapses in coverage or payment that could lead to penalties.
Option A is incorrect as mortgage payments are typically made directly to the lender, not through an escrow account. Option B is misleading; while interest is part of the mortgage payment, it is not specifically managed in an escrow account. Option C is irrelevant; escrow accounts do not handle the bank's invoices, which are unrelated to property ownership responsibilities.
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