April 21, 20196 yr Thinking about removing my escrow account from my mortgage , I have met all the requirements to do so. Any downside to doing this ? I have the discipline to sock away the required money and would rather be making interest on the money rather than the mortgage company.
April 21, 20196 yr None. I did it as soon as I was able. I mean it's not all that different except you have control over more of your money, which is always good.
April 21, 20196 yr State law (Texas) allows the mortgage company to keep an extra two months worth of payments in the escrow account as "insurance", meaning they keep extra money of yours. I got rid of mine as soon as we meet the qualifications to do so.
April 21, 20196 yr Sucks balls writing that big check at the end of the year but otherwise worth it to earn that interest. Do it.
April 21, 20196 yr 22 minutes ago, Steel Shank said: State law (Texas) allows the mortgage company to keep an extra two months worth of payments in the escrow account as "insurance", meaning they keep extra money of yours. I got rid of mine as soon as we meet the qualifications to do so. Yep. This sucks nuts BIG TIME especially if you happen to refinance and you've had absolutely no history of late payments, etc. And if your taxes and/or homeowners insurance happen to go up enough to hit a certain trigger, they will bump your payment up even if you have enough reserves in the escrow to cover the bills with your annual review. Get rid of the fricken escrow ASAP!
April 22, 20196 yr Author State law (Texas) allows the mortgage company to keep an extra two months worth of payments in the escrow account as "insurance", meaning they keep extra money of yours. I got rid of mine as soon as we meet the qualifications to do so.Yep this is part of the reason I want to ditch escrow . Not to mention they get to keep the interest
April 22, 20196 yr 9 minutes ago, Gil Bang said: Tens of quarters We both know there are whores in Tijuana who will do nasty things for those tens of quarters. Hell, might not even need to cross the border, just head to National City.
April 22, 20196 yr 2 hours ago, luke duke said: How much interest do you expect to earn on the money? This is exactly what I'm wondering
April 22, 20196 yr We dropped it after the first year. The mortgage company tried really hard to talk me out of it which indicates that they make decent money off it somehow. As far as I could tell, the only real risk is if you forget to pay on your own somehow. I don't remember what the actual consequences were, but I don't think they look too fondly on people dropping escrow and then missing a tax or insurance payment.
April 22, 20196 yr Paying your taxes/insurance premiums via credit card can also net you some points, assuming you are disciplined enough to be able to pay off your credit card come collection time. Other than that the interest angle is really going to net anything for either party, it's more of just the mental aspect of you controlling your money. If you are doing it right you are basically setting up your own escrow for taxes/insurance. I think a mortgage company being against it is because most people aren't financially disciplined, and it would be a really bad idea for them.
April 23, 20196 yr 6 hours ago, tokamak said: We dropped it after the first year. The mortgage company tried really hard to talk me out of it which indicates that they make decent money off it somehow. As far as I could tell, the only real risk is if you forget to pay on your own somehow. I don't remember what the actual consequences were, but I don't think they look too fondly on people dropping escrow and then missing a tax or insurance payment. If you miss it the mortgage company is going to send you a bunch of notices until you keep missing it and then they are going to pay it and force the escrow back on you....
April 23, 20196 yr Author How much interest do you expect to earn on the money?150-200 bucks a year . Not a ton but would rather keep my own money then give it away to someone else
April 23, 20196 yr 16 hours ago, Gene Parmesan said: Paying your taxes/insurance premiums via credit card can also net you some points, assuming you are disciplined enough to be able to pay off your credit card come collection time. Other than that the interest angle is really going to net anything for either party, it's more of just the mental aspect of you controlling your money. If you are doing it right you are basically setting up your own escrow for taxes/insurance. I think a mortgage company being against it is because most people aren't financially disciplined, and it would be a really bad idea for them. Another reason that the mortgage companies are for it is that it is easier for them to be sure the payments they are made if they are making the payments themselves. Otherwise, they have to have systems in place to make sure that the taxes are paid (they will lose first lien status) and insurance is in place to prevent loss
April 23, 20196 yr 150-200 bucks a year . Not a ton but would rather keep my own money then give it away to someone elseYou either have high taxes or you are optimistic about interest rates.
April 23, 20196 yr 6 minutes ago, Quagmire said: 8000 is high for taxes? 8000 @ 2.1% is 168 a year But the escrow isn't taking out all 8000 at once. So you don't have 8000 invested for all 12 months. Not saying you shouldn't get rid of the escrow, just the investment return won't be that high. Edited April 23, 20196 yr by chitwood
April 23, 20196 yr 5 minutes ago, Quagmire said: 8000 is high for taxes? 8000 @ 2.1% is 168 a year Does your escrow keep 8000 in all year? Mine has about 1 month extra payment right now. It isn't until the end that it has built up for the full tax payment. I think it was like 50 bucks at my savings account rate (2%) that I lost in interest per year last i checked.
April 23, 20196 yr Author But the escrow isn't taking out all 8000 at once. So you don't have 8000 invested for all 12 months. Not saying you shouldn't get rid of the escrow, just the investment return won't be that high. They don’t but I already have the money saved for this year in my own savings. And will transfer monthly payments to fund next year so already ahead of the game. Thought everyone here was top 1% [emoji851]
April 23, 20196 yr 8000 is high for taxes?8000 @ 2.1% is 168 a yearDivide that by $8000 by 2 to get your average daily balance. So you get $84/yr assuming that you use a high yield online account that continues to pay 2.1% and don’t get lazy and just use Chase/BofA/whoever you normally use. In which case you would get about $4/yr in interest.
April 24, 20196 yr Author How does one get/know when eligible, to get rid of Escrow?Contact your loan holderEssentially you have to have 80% LTV, no 30-60 late payments in last 24 months, loan must be 2 years old minimum, etc If you have a FHA loan you are out of luck, it’s a requirement
April 24, 20196 yr I'm closing on my second home purchase this week, and both times, no escrow was added to begin with. We pay everything directly to the bank (loan), county (taxes) and insurance co (duh) with no from day one. Is that not an option in Texas?
April 24, 20196 yr 1 hour ago, Quagmire said: Contact your loan holder Essentially you have to have 80% LTV, no 30-60 late payments in last 24 months, loan must be 2 years old minimum, etc If you have a FHA loan you are out of luck, it’s a requirement Could you clarify this part for me. Is that the same as you would need to get the mortgage insurance taken off too? I'd like to do both honestly. My escrow amount went up recently and our loan payment went up quite a bit if we didn't pay the "estimated shortage", which we did. Ugh.
April 25, 20196 yr Author Could you clarify this part for me. Is that the same as you would need to get the mortgage insurance taken off too? I'd like to do both honestly. My escrow amount went up recently and our loan payment went up quite a bit if we didn't pay the "estimated shortage", which we did. Ugh.Correct , once you get more than 80% LTV they remove PMI, mine did it auto magically
April 25, 20196 yr 3 hours ago, Rimbo said: I'm closing on my second home purchase this week, and both times, no escrow was added to begin with. We pay everything directly to the bank (loan), county (taxes) and insurance co (duh) with no from day one. Is that not an option in Texas? That is certainly an option.
April 25, 20196 yr Contact your loan holderEssentially you have to have 80% LTV, no 30-60 late payments in last 24 months, loan must be 2 years old minimum, etc If you have a FHA loan you are out of luck, it’s a requirement Are y’all talking about escrow for taxes and insurance, or are you talking about PMI? Because this sounds like you’re talking about PMI.
April 25, 20196 yr About a year after we bought our house, I contacted my bank and asked them how much left to hit 20% equity. Made the payment and asked them to remove the PMI and refund my escrow balance. I've managed it myself ever since because I like to be in control of my own money. It seems like if you waited a certain amount of time you maybe had to get an updated appraisal. Or maybe I just made that part up.
April 25, 20196 yr 15 hours ago, Lobwedgephil said: That is certainly an option. OK, whew. Some of this discussion about "Texas state law requires 2 months'" etc is making me scratch my head in confusion. Granted, I'm not buying in Texas, since I'm currently surviving a Californian Exile, but ...
April 25, 20196 yr 11 minutes ago, Rimbo said: OK, whew. Some of this discussion about "Texas state law requires 2 months'" etc is making me scratch my head in confusion. Granted, I'm not buying in Texas, since I'm currently surviving a Californian Exile, but ... Simple...let's say to keep it easy your tax and insurance came out to 12K a year in 2018. So you would in theory pay 1K a month for your escrow payment to cover those payments in 2019. BUT the 2 months is a "cushion" because nobody really knows when they are calculating your escrow payment what your taxes and insurance are going to be next year. The law allows the servicer to calculate your escrow payment on the premise that they need those extra two months to cover those increases when the bill comes due next. Some states allow one month, some states don't allow any cushion (and the servicer has to cough up the money if the bill comes in higher, though they will then collect it back from you) So if you do happen to live in a state that doesn't allow your servicer to keep a cushion and you generally have appreciating tax/insurance payments it could be worth it in those very specific circumstances to keep escrow and let your servicer come up with the extra money and then pay it back to them the next year interest free....again pretty limited scenarios where that makes sense. As to Phil's comments on MI.... yes those are generally the same requirements. Most servicers will apply the same general set of guidelines as a requirement that you meet before they will drop the escrow account the loan was originated with. Edited April 25, 20196 yr by Surly Bevo
April 25, 20196 yr 6 minutes ago, Surly Bevo said: Simple...let's say to keep it easy your tax and insurance came out to 12K a year in 2018. So you would pay 1K a month for your escrow payment to cover those payments in 2019. BUT the 2 months is a "cushion" because nobody really knows what your taxes and insurance are going to be next year so the law allows the servicer to calculate your escrow payment on the premise that they need those extra two months to cover those increases when the bill comes due next. As to Phil's comments on MI.... yes those are generally the same requirements. Most servicers will apply the same general set of guidelines as a requirement that you meet before they will drop the escrow account the loan was originated with. Okay, I get how it works when you do it. What I was confused by was that it sounded like you couldn't opt out of Escrow beyond the transfer of ownership. I've certainly never made taxes or insurance payments to anyone other than the County and insurance company, respectively, and neither of my home purchases have required that I pay them into escrow or rolled up into the loan or anything like that. Escrow ends when you get the keys to the house, in other words. Edited April 25, 20196 yr by Rimbo
April 25, 20196 yr 2 minutes ago, Rimbo said: Oh, I know how it works when you do it. What I was confused by was that it sounded like you couldn't opt out of this. I've certainly never made taxes or insurance payments to anyone other than the County and insurance company, respectively, and neither of my home purchases have required that I pay them into escrow or rolled up into the loan or anything like that. Nah that's just what the law allows the servicer to do when you have an escrow account...if you originate the loan without escrow none of that stuff applies. But if you do originate the loan with escrow and are in Texas then yea you are stuck playing by those rules until you get rid of it. Edited April 25, 20196 yr by Surly Bevo
April 25, 20196 yr 5 minutes ago, Surly Bevo said: Nah that's just what the law allows the servicer to do when you have an escrow account...if you originate the loan without escrow none of that stuff applies. But if you do originate the loan with escrow and are in Texas then yea you are stuck playing by those rules until you get rid of it. All clear. Thanks! Edited April 25, 20196 yr by Rimbo
April 25, 20196 yr Yeah you guys are confusing Mortgage Insurance with Escrow payments. My lender gave the option that since I was putting 20% down, if I wanted to give them I think an extra 1000 at closing to start up an escrow which I declined.Conventional loan here.
April 26, 20196 yr Don't most mortgage companies jack up the rate by a quarter to half a point if you opt out of escrow?
April 26, 20196 yr Just ran it through our pricing engine. No change LOAN DETAIL Total Loan Amount: $320,000.00 Interest Rate: 4.375 Escrow Waiver Fee: 0.000 Total Interest Rate: 4.375
April 26, 20196 yr Don't most mortgage companies jack up the rate by a quarter to half a point if you opt out of escrow?This, I think our Lender did that to us.
April 26, 20196 yr Never heard of that and I’ve taken it off 2 properties as soon as we were under80% LTV.
April 27, 20196 yr Based on previous posts, it seems to be up to the lender. 80% is a threshold that some use, but apparently not all. Mine did.
April 27, 20196 yr So y'all take the extra time to pay the insurance and taxes yourself just to save maybe 100 bucks a year? Y'all too cheap to buy turbotax as well? My time has value, and I figure that's a pretty low price to not have to worry about all that.
April 27, 20196 yr The fuck are you talking about time? Takes five minutes to make the payment and in the meantime I get to have control over a decent chunk of cash. I don't want to trust anyone else with my money if I don't have to. Has nothing to do with saving $100.
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