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Old 06-11-2011, 05:42 PM
 
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I was told by Quicken loans that I'm conditionally approved for a 20 year conforming fixed mortgate loan at 4.5%. Their appraiser just appraised the house at $344,000. My refinance loan amount is 309,475 so I am at a 89.8% loan to value ratio. My monthly payment is $1957.90 with PMI of 85.11. Quicken Loans has told me I do not have to escrow my property taxes which are around $6,000 per year or my homeowners/hazard insurance which is 139.44 a month. Are they correct in making this statement? I've no issue with the PMI as I will likely pay down to 20% or more equity in the next 18 months. The insurance is automatically taken out of my checking account with autodraft today by my insurance company. I've always paid my property taxes for the entire year the last week of December each year when they are due - largely becuase my bonus/commission comes in at the end of November.

I am looking to refinance because I currently have a first mortgage that is interst only (which does nothing to help pay down the house) with 25 years remaining and a second which is principle + interest. The first is currently at 6.5% the second is at 6.785% with 15 years remaining.

I can easily afford the new slightly higher monthly mortgage in moving to this new loan but NOT if they require that I escrow the $475 in property taxes each month.

I'm in the state of Texas. Can anyone tell me definitely positively without any question if I must escrow property taxes and hazard insurance if my loan to value ratio is greater than 80%. It appears it may be dependent upon the lender but I'm not sure.
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Old 06-12-2011, 06:47 AM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
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Yes, every investor I have ever run across requires an escrow at over an 80% LTV.

Ask Quicken if you can do an 80/10/10 (80% first, 10% 2nd) and avoid the MI and pay your own escrows. That would be my recommendation, not for the escrows, but for the PMI. After all, the interest on the second is tax deductible, where PMI is not always deductible. And, that second can be paid down quickly, saving you the hassle of chasing down the removal of the PMI (which is there for a minimum of 2 years and will require you to obtain an appraisal).

Also, there are many PMI options......monthly, SuperSimple, Financed, LPMI, some with refunds. There are advantages and disadvantages to each. Make sure your Quicken rep is well versed in the options and goes over them with you.
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