Mortgage loan management after closing - first time buyer help. (fixed rate, interest)

[stan4]

Look, obviously the bank wants you to do escrow. They get to hold your money and make interest off it all year long until it's time to pay the taxes/insurance. So I don't see why they would tell you if you don't ask.

[gcretro]

Originally Posted by stan4

YES, bring it up with them.
Every time we do business with a home lending, they assume escrow and we wind up telling them, "Uh, no. What the hell kind of people are you used to dealing with?"

So I don't think it is every too late to ask.

Thanks. I'll check. I am almost positive, they'll want to charge me a waiver fee (since my loan officer knows I won't dump them since rates have gone up)

Now, if I have no choice but to accept escrow:

1. Can I ask my lender not to escrow home owner insurance? but only escrow property taxes.

2. Do I assume that the "cushion" will be equal to 2 month additional escrow payments (per by HUD/RSPA laws). Or should I confirm with the lender?

3. As a newbie, Are there any other questions related to escrow I need to clarify with my lender prior to closing?

[stan4]

I will ask my wife for you when she wakes up.
She was a banker for years before going into finance.

[BoBromhal]

ask your Realtor.

at 20% down, your rate shouldn't have a thing to do with escrowing.

you either escrow - taxes AND insurance - or you don't. not one or the other.

your 1st year of HO insurance will be paid in advance, at closing. they'll collect an extra 2-3 months worth of that, plus 2-3 moths of property taxes.

[bosoxfan1]

If you cannot change the escrow setup before the closing, once you get notification of who is going to be servicing your loan, you should be able to contact them to cancel the escrow.

[dad2jules]

Almost every comment was true at one time or another in the past. The relationship between escrow waiver and rates is that there is a "charge" to waive escrow at any LTV. For example if your rate with escrow has a lender credit of .5% of loan amount without escrow it will have .25% lender credit or a .25% adjustment. In the past- 2008 or earlier- you could waive it with high credit or 20% down but not anymore. Are you going to cancel escrow after closing- did you win the megamillions- about the same odds today. Lenders do not make any interest from the balance in your escrow account period- it is a violation of law.

Bottom line here is this is all information you should be getting from your Loan Officer. Hopefully lesson learned that there is more to selecting a Loan Officer than just rate. If your LO was a referral from your RE Agent let them know that the LO is not making you comfortable.

[wheelsup]

Who cares about escrow. At maybe 1% interest you are losing what maybe a max of $50 a year in interest and that's a hefty tax amount. Almost seems like a badge of honor to boast you don't pay into escrow. Forget about it, let someone else handle the tax and insurance payments and just enjoy the house. Jeez.

[lauradrops]

We cancelled our escrow the beginning of this month. We called and asked to do it and they said OK and mailed us the remaining money in the escrow account. The tax bills will be mailed to our house and our insurance agent agreed to bill us once a year for homeowners. Really was no big deal at all. There were no fees, penalties or rate changes.

[adlnc07]

Originally Posted by dad2jules

Almost every comment was true at one time or another in the past. The relationship between escrow waiver and rates is that there is a "charge" to waive escrow at any LTV.

Originally Posted by lauradrops

We cancelled our escrow the beginning of this month. We called and asked to do it and they said OK and mailed us the remaining money in the escrow account. The tax bills will be mailed to our house and our insurance agent agreed to bill us once a year for homeowners. Really was no big deal at all. There were no fees, penalties or rate changes.

There seems to be a dichotomy here..

[adlnc07]

Originally Posted by wheelsup

Who cares about escrow. At maybe 1% interest you are losing what maybe a max of $50 a year in interest and that's a hefty tax amount. Almost seems like a badge of honor to boast you don't pay into escrow. Forget about it, let someone else handle the tax and insurance payments and just enjoy the house. Jeez.

It's not about the interest on the escrow balance - it's about having to have "extra" on deposit with your lender for months or years at a time. It's also about avoiding the unpleasant surprise of a big bump in your mortgage payment due to changing property tax or insurance rates. It didn't cost me any extra to not escrow my taxes/insurance when I did my refinance in 2010 so why not just manage it myself? The vast majority of people do escrow, but it's good to know there is another option.