Settlement
Impound account
A lender-held account collecting monthly amounts for taxes and insurance
Also called an escrow account. The lender collects a twelfth of the annual bills with each payment and pays them when due, protecting itself against a tax lien or a lapse in coverage. It is the T and the I in PITI.
How the exam asks about it
It is why a fixed-rate loan can still have a changing monthly payment — the principal and interest are fixed, the impounds are not.
Related terms
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