Final answer:
When a borrower is required to maintain an escrow account with the lending institution, the money in that account may be used to pay the homeowner's property taxes and home insurance.
Step-by-step explanation:
When a borrower is required to maintain an escrow account with the lending institution, the money in that account may be used to pay the homeowner's property taxes and home insurance.
An escrow account is a separate account held by the lender where money is deposited on behalf of the borrower to cover expenses such as property taxes and insurance. This ensures that these payments are made on time and the borrower doesn't have to worry about making separate payments for these expenses.
For example, if a borrower has an escrow account and their property taxes are due, the lender will use the funds from the escrow account to pay the property taxes directly.