Refinance Obligations

[donehs5]

What is the name of your state? MI

We are to refinance the present mortgage with the same lender; an escrow account was to be set-up for a 5-1 ARM. Now the lender says that the escrow would only be applicable to pay for our summer taxes and thereafter, the tax committment would be our responsibilty. My questions, since the rate was 'locked' by the lender, and that they picked up a 1/4 point -- and that we did not sign any refinance application related documents to refinance, are we obligated to this lender? Do I have a fiscal committment to the lender since there is nothing binding that we had signed? Please advise.

Thank-you.

[efflandt]

What specifically are you objecting to? It almost sounds like you object to them NOT collecting your property tax money in advance and holding it without paying any interest (escrow). That should be a blessing instead of a distraction, unless you have trouble setting aside the money for taxes/insurance without spending it.

Sooner or later you are obligated to pay property taxes. Frankly I was thrilled when I refinanced and they gave me an interest bearing checking account to do my own escrow and pay my own bills, because with my previous mortgage they screwed up tax payments on my double lot (received notice of tax sale). It only pays 0.9%, but that is better than my other checking account, and auto paying my loan from that account saves me 1/4% interest and stamps.

[Navyworried]

Your are under no obligation to re-finance your home. For some reason you seem not trust your current lender. I suggest you do more homework and understand how an escrow account works, how property taxes are paid and then you can make an informed decission regarding your escrow. Lenders set an escrow up as a service to you. It is to your benefit not to have your homeowners insurance cancelled or a tax lien placed on your home.