​Annie's mortgage statement shows a total payment of ​$633.93 with ​$522.14 paid toward principal and interest and ​$111.79 paid for taxes and insurance. Taxes and insurance for three months were collected at closing.​ Now, after six months of​ payments, she is curious about the total in her escrow account. Calculate the amount for​ her, and explain the account.
Question content area bottom
Part 1
Calculate the amount for her and explain the account.  ​(Select the best answer​ below.)
A.
Assuming no​ monthly, quarterly or​ semi-annual tax or insurance withdrawals from the​ account, the account should total ​$670.74.  An escrow account is a special reserve account used to accumulate the annual property​ (real estate) tax payments and​ homeowner's insurance premiums for the homeowner.
B.
Assuming no​ monthly, quarterly or​ semi-annual tax or insurance withdrawals from the​ account, the account should total ​$335.37.  An escrow account is a special reserve account used to accumulate the annual property​ (real estate) tax payments and​ homeowner's insurance premiums for the homeowner.
C.
Assuming no​ monthly, quarterly or​ semi-annual tax or insurance withdrawals from the​ account, the account should total ​$1 comma 006.11.  An escrow account is a special reserve account used to accumulate the annual property​ (real estate) tax payments and​ homeowner's insurance premiums for the homeowner.

To determine the total amount in Annie's escrow account, let's break it down step-by-step:

1. **Monthly Payment Breakdown:**
   - Total monthly payment: $633.93
   - Amount toward taxes and insurance: $111.79
   - Amount toward principal and interest: $522.14

2. **Payments into the Escrow Account:**
   The escrow portion of the payment ($111.79) is used to accumulate funds for property taxes and homeowner's insurance. Annie makes this payment every month, and since she has been making payments for 6 months, we can calculate the total amount contributed to the escrow account:
   
   \[
   \text{Total escrow payments} = 111.79 \, \text{(monthly amount)} \times 6 \, \text{(months)} = 670.74
   \]

3. **Escrow Account:**
   - The escrow account is a reserve account used to collect payments for annual property taxes and homeowner's insurance, so they can be paid when due.
   - At closing, three months of taxes and insurance were collected upfront. This means no withdrawals have likely been made for taxes and insurance in the first six months.
   
Therefore, assuming no monthly, quarterly, or semi-annual withdrawals from the account, the amount in the escrow account should be **$670.74**.

### Conclusion:
The correct answer is **A**. 
"Assuming no monthly, quarterly, or semi-annual tax or insurance withdrawals from the account, the account should total $670.74. An escrow account is a special reserve account used to accumulate the annual property (real estate) tax payments and homeowner's insurance premiums for the homeowner."

Would you like more details, or do you have any questions?

---

Here are five related questions to expand your understanding:
1. What happens if taxes or insurance payments increase during the mortgage term?
2. How is the escrow account adjusted if taxes or insurance are overpaid?
3. How does a lender determine the initial amount to collect for an escrow account at closing?
4. Can a homeowner opt out of having an escrow account in their mortgage arrangement?
5. What happens if there is a shortage in the escrow account when taxes or insurance are due?

**Tip:** It's essential to review your mortgage escrow account statement annually to ensure the correct amount is being collected for taxes and insurance, and to avoid any surprises when those payments are due.

Annie's mortgage statement shows a total payment of ​$633.93 with ​$522.14 paid toward principal and interest and ​$111.79 paid for taxes and insurance. Taxes and insurance for three months were collected at closing.​ Now, after six months of​ payments, she is curious about the total in her escrow account. Calculate the amount for​ her, and explain the account.

Learn how to calculate the escrow account balance for Annie's mortgage after six months of payments. This problem breaks down the mortgage statement, including principal, interest, and escrow payments, with a focus on arithmetic operations and escrow account management. Suitable for students in Grades 9-12.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation