What is the prepayment requirement for Escrow funds if property taxes are $3,000 with an additional two months prepayment?

To determine the prepayment requirement for escrow funds in this scenario, you first need to understand the nature of the prepayment for property taxes. The property tax amount is stated as $3,000, which represents one full year of taxes.

In many cases, lenders require that borrowers prepay a certain number of months of property taxes to ensure that funds are available to cover tax payments when they come due. The additional requirement of two months of prepayment means you'd take the annual tax amount and calculate the equivalent for the additional months.

Since the annual tax is $3,000, the monthly tax would be calculated as follows:

[ \text{Monthly Property Tax} = \frac{\text{Annual Property Tax}}{12} = \frac{3,000}{12} = 250 \text{ per month} ]

Adding two months of prepayment involves:

[ \text{Total Prepayment} = \text{Annual Property Tax} + (2 \text{ months} \times \text{Monthly Property Tax}) ] [ = 3,000 + (2 \times 250) = 3,000 + 500 = 3,500 ]

However, in this question,