If property owners fail to pay their taxes in a timely fashion, this can create a first lien on the mortgaged property. In order to protect against this, lenders often require that borrowers add what fraction of their estimated tax bill to their required monthly mortgage payments?
A) 1/12
B) 1/6
C) 1/4
D) 1/2

Question

Quizplus · Accepted Answer

Lenders often require that borrowers add 1/12 of their estimated tax bill to their required monthly mortgage payments in order to protect against a first lien on the mortgaged property in case the property owners fail to pay their taxes on time. This is also known as an escrow account, which ensures that taxes and other expenses are paid on time.

If Property Owners Fail to Pay Their Taxes in a Timely