Escrow account requirments.

[1pod]

What is the name of your state? Oklahoma

Can a mortgage company require me to maintain an escrow account for taxes and insurance? If not can they charge me a fee to close one? I am tired of having to deal with shortages and having to make up the differences. If I have to deal with this I may as well pay the obligations my self.What is the name of your state?

 

[nextwife]

You are obligated to the terms of the mortgage you have. If they they require and escrow, then you must have one. If they tend to undercollect, simply stash an extra amount each month into your own shortfall account.

Personally, I shopped for, and refinanced into a local portfolio mortgage in which I could opt out of tax escrow by paying a one time fee of an 1/8th pt. So, the option of refinancing into a mortgage in which escrow can be waived certainly exists (ours required a 70% or better LTV ration).

 

[moburkes]

What is the name of your state? Oklahoma

Can a mortgage company require me to maintain an escrow account for taxes and insurance? If not can they charge me a fee to close one? I am tired of having to deal with shortages and having to make up the differences. If I have to deal with this I may as well pay the obligations my self.What is the name of your state?

I have a question, simply because I'm curious. Aren't shortages, well, a fact of the situation? Taxes go up, so if your escrow was "budgeted" for when they were less....then there is a shortage. Insurance rates definitely go up.....

I guess what I'm wondering is, if you didn't have taxes and insurance escrowed, and your budget fell short, because your taxes and/or insurance rates increased, isn't the problem still the same?

 

[1pod]

The option to opt out of the escrow in the case of this mortgage company requires a 2 point buy out. That’s a little high in my opinion. I have gone over the contract I signed when I took out the mortgage and I can’t find were it says that I must maintain a escrow account. To the best of my knowledge I agreed to pay these oblations but not how they would be paid. The first time I had to go back over my contract was because the mortgage company was requiring that I maintain a maximum of a 1% deductible on my home owners insurance. There was no maximum deductible requirement in the contract. They backed off on this position however. In the case of this escrow they seam to be unbending. That’s why I am here asking what my options may be.

As for any short falls or increases, the issue for me is not about budgeting but the idea that the mortgage company holds this money through out the year collecting interest when I could be doing the same thing. I have no problem paying the obligations nor would I have a problem maintaining my own account in order to pay them. I am paying these obligations. I will continue to pay these obligations. The only reason the mortgage company wants to continue to pay the taxes and insurance is to “PROTECT THEIR INTRESTES”. To that end I say male bovine fecal mater. I am sure that protecting their interests generates a large profit at their customers’ expense.

 

[moburkes]

Gotcha!

 

[pojo2]

The only reason the mortgage company wants to continue to pay the taxes and insurance is to “PROTECT THEIR INTRESTES”. To that end I say male bovine fecal mater.

Read a few posts around here at folks who took it on themselves and within a year they are already wondering how the tax bill will be paid. Use to be 20% down no escrow but I suppose iin this day of 100% mortgages and wondering where the first payment will even come from lenders have a right to be concerned.

 

[efflandt]

My original mortgage had tax escrow (no insurance escrow), which I didn't particularly care for (especially when they initially neglected to pay tax on both parts of double lot), but as a first time home buyer probably had no choice. At least when it all shook out and they sent me too much money back, and then needed it to make up a shortfall the next year, they gave me a long time to pay it without interest.

When I researched refinancing a year or two ago, internet info showed higher interest rates without escrow than with. When I refinanced with my existing lender 3/05 (effectively a 1st lien HELOC at $170 closing cost for lower fixed interest/shorter term), I was thrilled that they gave me an interest bearing checking account to do my own escrow (to auto-pay loan, and write my own checks for tax/insurance).

Now that I pay my own taxes, a different problem. County website shows 1st installment tax "unpaid" plus interest, e-mail to treasurer said no record of mailed payment, but my check (with correct tax account numbers) has already cleared and was deducted from account before the due date. So that needs to be resolved.

Where some people get into trouble, even with escrow, is when they buy a newly built home, initial taxes due from previous year were for an empty lot, the lender underestimates tax for completed home, and the home owner suddenly ends up with much higher escrow payments than expected (double annual tax) to make up the shortfall. That along with rising variable interest rates could really take a bite out of a budget.