An escrow account is typically used to pay which of the following?

An escrow account is primarily used to collect and manage funds for specific financial obligations related to real estate ownership. In this context, the correct answer relates to property taxes and homeowner's insurance.

When a homeowner takes out a mortgage, lenders often require the establishment of an escrow account to ensure that taxes and insurance premiums are paid on time. Monthly mortgage payments may include a portion that goes into the escrow account. This accumulation of funds allows the lender to pay property taxes and insurance directly when they are due, alleviating concerns for the homeowner regarding potential missed payments that could result in penalties or foreclosure.

The other options do not align with the typical uses of an escrow account. While principal and interest are components of mortgage payments, they are not managed through an escrow account. Building repairs and maintenance are the responsibility of the homeowner and are not typically managed through escrow. Closing costs and fees are incurred at the time of a property transaction and are not services for which an escrow account would be maintained post-transaction. Therefore, property taxes and homeowner's insurance clearly represent the primary uses of funds held in an escrow account.