When is the borrower responsible for the funds in the impound account?

The borrower is responsible for the funds in the impound account during the entire loan term. An impound account, also known as an escrow account, is used by lenders to collect and hold the funds for property taxes and insurance premiums. These funds are collected as part of the monthly mortgage payment, and the lender manages this account to ensure that taxes and insurance are paid on time.

This arrangement provides a level of security for both the borrower and the lender. The borrower benefits from not having to pay large sums at once for taxes or insurance, while the lender is protected from the risk of the property being uninsured or tax-delinquent. Since the role of the impound account is to facilitate the management of these payments consistently throughout the entire loan period, the borrower retains responsibility for the funds in that account as long as they have an active loan.

Other options do not accurately reflect this ongoing responsibility—the funds will not be solely tied to a particular event like selling the property, making the last loan payment, or specific tax due dates. Instead, they are part of an ongoing financial obligation throughout the life of the loan.