New Jersey Real Estate Practice 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-related expenses, ensuring that payments are made on time. Option D accurately reflects this purpose, as property taxes and insurance premiums are commonly held in escrow to prevent lapses in coverage.
Option A is incorrect because mortgage payments are typically paid directly to the lender, not through an escrow account. Option B is misleading; interest on a loan is part of the mortgage payment and is not specifically managed through an escrow account. Option C is irrelevant, as escrow accounts are not used for managing a bank's invoices.
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