Hazard Insurance (lender, refund, fund, payment)

[darkblue]

So who gets the interest that is generated from escrow account?
The home owner???
When we pay the insurance for one year in advance, will it be refunded when we pay the mortgage in full?

[renriq02]

They are supposed to put the money in a NON bearing interest account.
If they plan to put it in a interest bearing account...they will need your permission.

If you payoff the mortgage....whether you won the lotto. and paid cash..refinanced your loan with another lender...or just sold your home...they will send you a check for the amount that's in your escrow account.

Originally Posted by darkblue

So who gets the interest that is generated from escrow account?
The home owner???
When we pay the insurance for one year in advance, will it be refunded when we pay the mortgage in full?

[darkblue]

Thanks banker for our responses.

Thanks everybody for your help

[sierraAZ]

Originally Posted by banker0679

This is 'illegal' if they dont have YOUR permission to do so. This will be one of the documents you will sign at closing....usually they dont collect interest.

Even so, I don't see why I wouldn't collect interest on it... Sounds like all those happy-go-lucky people jumping up and down how big of a tax refund they got. Sure, wonderful... you didn't estimate your taxes correctly, had your paycheck reduced, and provided Uncle Sam with an interest-free loan for a year. Me no likie doing Uncle Sam any favors. He already gets more than his fair share.

I suppose paying monthly works for people who have no financial discipline, but otherwise it makes no sense to me.

[golfgal]

Originally Posted by sierraAZ

Even so, I don't see why I wouldn't collect interest on it... Sounds like all those happy-go-lucky people jumping up and down how big of a tax refund they got. Sure, wonderful... you didn't estimate your taxes correctly, had your paycheck reduced, and provided Uncle Sam with an interest-free loan for a year. Me no likie doing Uncle Sam any favors. He already gets more than his fair share.

I suppose paying monthly works for people who have no financial discipline, but otherwise it makes no sense to me.

It is a convenience thing for most people and unless you have an enormous escrow account any interest earned would be minimal. You probably pay more in stamps to send the payments then you would earn in interest on any funds used to pay our homeowners insurance.

[Briolat21]

Well, since taxes here are a few thousand dollars (about 5) for my type of home, that's just not the way I want to have that money handled.

And - you're right, if you're living paycheck to paycheck and have no discipline or reserves, an escrow may be right for you. We have reserves and discipline - and still the idea that I could default on my mortgage for a matter that is actually TAXES (which you can probably get an extension on) makes me shudder at the idea of escrow. I prefer all my little boxes to be seperate. Mortgage to lender. Insurance to Insurer. Taxes to County. Not a big box with all of them mushed together.

Anyway, as I stated, just my personal thing. Most of the world happily has escrow and thinks nothing of it.

[sierraAZ]

Originally Posted by golfgal

It is a convenience thing for most people and unless you have an enormous escrow account any interest earned would be minimal. You probably pay more in stamps to send the payments then you would earn in interest on any funds used to pay our homeowners insurance.

I didn't opt completely out of it. Apparently there's a 3- or 4-month reserves requirement and if you don't do that your interest rate will be higher. That's something I certainly don't wanna do. I have the money. Just don't see any good reason to give them $2,000 for the RE taxes upfront now (guess I lumped all reserves together; sorry about that) since they're not gonna be 2K even next year or the year after that, or mostly like not any time soon in my particular case. In the case of homeowners insurance, I wouldn't argue with you because at least here it's somewhat ignorable amount. In any case, to me it's more of a matter of principle that a matter of savings.

Stamps... if you're talking about regular stamps for mailing, don't remember the last time I used any. If you're talking about the "Doc Stamps Fee" on the GFE, that's something I really don't understand. Brushed it off as a necessary evil - after all you have to pay SOME (but not all - took care of that ) junk fees. There's no escape from that as far as I know.

Btw, there was a petition yesterday in Tucson for rolling back the RE taxes. No doubt they'll have no problem collecting the needed number of signatures. It's getting to be totally ridiculous - your house is worth less, but the taxes are way up there based on the '05/early '06 peak.

[renriq02]

Sometimes taxes are due 2-3 months BEFORE you move into your new home.
If the taxes are due in 11months...you can certainly make those payments within those 11months.

Stamps are charged by your city/county/state...and not by the lender/title company. Sometimes they're known as 'excise taxes'. (this is probably the reason there's no way around it)

Originally Posted by sierraAZ

I didn't opt completely out of it. Apparently there's a 3- or 4-month reserves requirement and if you don't do that your interest rate will be higher. That's something I certainly don't wanna do. I have the money. Just don't see any good reason to give them $2,000 for the RE taxes upfront now (guess I lumped all reserves together; sorry about that) since they're not gonna be 2K even next year or the year after that, or mostly like not any time soon in my particular case. In the case of homeowners insurance, I wouldn't argue with you because at least here it's somewhat ignorable amount. In any case, to me it's more of a matter of principle that a matter of savings.

Stamps... if you're talking about regular stamps for mailing, don't remember the last time I used any. If you're talking about the "Doc Stamps Fee" on the GFE, that's something I really don't understand. Brushed it off as a necessary evil - after all you have to pay SOME (but not all - took care of that ) junk fees. There's no escape from that as far as I know.

Btw, there was a petition yesterday in Tucson for rolling back the RE taxes. No doubt they'll have no problem collecting the needed number of signatures. It's getting to be totally ridiculous - your house is worth less, but the taxes are way up there based on the '05/early '06 peak.

[sierraAZ]

Originally Posted by banker0679

Sometimes taxes are due 2-3 months BEFORE you move into your new home.
If the taxes are due in 11months...you can certainly make those payments within those 11months.

Many things are regional as well, I suppose. Perhaps that's where some of the miscommunication comes from. When I was reading in the past about RE attorneys being involved in simple sales I was puzzled. While this is not done in most of the West (to the best of my knowledge), apparently it's standard practice in other states.

[TimtheGuy]

Originally Posted by Karla with a K

We handle our own escrow, after years in the industry I have seen to many "slip through the cracks"
We were 70/30 ltv and did not have to pay a fee not to escrow
lol they tried but as I tell people all the time "great credit does the talking"
I simply told them I have a 800+ credit score and 30% down I am gold, you need me more than I need you so If you don't want to do this there are many who will"

As jeff said a lot will be determined by the type of loan.

You just got the lender to "eat" the 1/4 pt. fee. Which means you could have got him to "eat" 1/4 pt. in fees if you had decided to escrow too. He obviously had enough profit built in to the deal to do so.