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I need to refinance my house in Florida and need to know which banks will allow me to manage my escrow. Right now I am paying 1200.00/month for my escrow alone. We are short on the escrow (because of property taxes) and they will be collecting from me $14,400 annually when the taxes and insurance only ads up to $8,000 - I could do a better job at this myself.
As long as you have at least 20% equity...ALL lenders will allow you to take care of your own taxes and insurance.
If you are doing a secondary market loan, there is a .25% cost to do this. You may never see this cost as it may be buried into your rate or you may be charged a .25% discount point to cover it.
This is another good reason to go to a mortgage broker. Tell them you want to refinance your house and that the one stipulation is that you do NOT have to escrow. They will find you a lender that will do that. I do not originate in FL but it is my understanding that it is hard to find a lender that will not escrow due to the huge increase in taxes and insurance and insurance companies pulling out of FL so they could place forced insurance on you in the event you are dropped from your current insurance Co. and can't get coverage elsewhere. But any good FL mortgage broker will know this info off the top of their head so just make some local calls and see what flies. Good luck.
Almost all of the lenders I work with (all a-paper) allow for an escrow waiver. What TimTheGuy said is 100% accurate, if your LTV is below 80% there is no fee, if above 80% there is either a .25% point charge or it can be buried into your interest rate.
Another big plus waiving escrow (especially such a large escrow as yours) is you can put away this money in an interest bearing account, invest it, or use it to keep your mortgage balance lower than normal until everything is due. (that last strategy involves the use of a HELOC in place of some of your regular first mortgage)
p.s. I just noticed you said your taxes and insurance only add up to 8K but you are paying 14,400 annually?? Can I assume either your taxes, insurance, or both went up significantly in the past year?
Check your last mortgage statement to see what the balance is currently in your escrow account. If your escrow account is negative, they are just charging you extra every month to make up the difference by year end.
If you do have a negative balance, when you refinance you will have to pay off this negative balance.
I recently took out an 80% mortgage and had trouble finding a true fee free way to get an escrow waiver. I think I wound up with a rate .125 higher although they claimed it was no charge. Other lenders insisted on an up front .25% point as noted by other posters.
I recently took out an 80% mortgage and had trouble finding a true fee free way to get an escrow waiver. I think I wound up with a rate .125 higher although they claimed it was no charge. Other lenders insisted on an up front .25% point as noted by other posters.
You're right. For Fannie/Freddie loans there is no free escrow waiver that I am aware of. Don't want to escrow...costs .25% whether you know it or not.
And the real shame is I manage my own escrow only out of self defense! EVERY mortgage company I have had (probably eight or nine) have screwed up my escrow in one way or another. They have paid taxes I did not owe, failed to pay taxes I did owe, were late or wrong on insurance, or consistently wanted way more of my money than they would need if they were timely and accurate.
It appears it is going to cost the borrower one way or another but for me there is simply less aggravation if I pay to do it myself.
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