California Real Estate Practice Exam

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Study for the California Real Estate Exam. Engage with multiple choice questions and detailed explanations to sharpen your knowledge. Get ready to ace your real estate career!

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What is an impound account used for by a mortgage lender?

To store extra interest payments
To hold money for future repairs
To cover taxes and hazard insurance costs for the property
To collect late payment fees

The correct answer is: To cover taxes and hazard insurance costs for the property

An impound account, also known as an escrow account, is used by a mortgage lender to collect funds for taxes and insurance costs for the property. This is so that the lender can make sure these important expenses are paid on time. Option A is incorrect because an impound account is not used for storing extra interest payments. Option B is incorrect as well because it is not used for holding money for future repairs. Lastly, option D is incorrect because an impound account is not used to collect late payment fees.