Illinois 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 tax payments that could lead to financial penalties.
Option A is incorrect as mortgage payments are typically made directly to the lender, not through an escrow account. Option B is misleading, as interest on a loan is part of the mortgage payment and not specifically handled through escrow. Option C is not relevant, as escrow accounts do not pay a bank's outstanding invoices. Thus, D accurately reflects the primary purpose of an escrow account in real estate transactions.
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