Escrow accounts in mortgage loans typically cover which items?

• A. Principal and interest
• B. Property taxes and homeowners insurance
• C. HOA dues
• D. Title and recording fees

Answer: (B)

Escrow accounts are used to manage ongoing charges tied to owning a home, paid on a predictable schedule to protect both the borrower and the lender. The typical items funded through escrow are property taxes and homeowners insurance because these are recurring, annual (or semi-annual) obligations tied to the property. By collecting monthly amounts into escrow, the lender ensures taxes and insurance are paid on time, preserving the property as collateral and preventing lapses in coverage or tax liens. Principal and interest are the loan’s debt service and are paid directly toward the loan, not from escrow funds. HOA dues aren’t automatically escrowed in every loan; they may be included only if the lender requires it, but that’s not standard. Title and recording fees are closing costs paid at origination, not ongoing monthly escrow items.