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Started By
Message
Is it possible to get a home mortgage without escrows?
Posted on 11/2/12 at 11:36 am
Posted on 11/2/12 at 11:36 am
I am looking at buying a home, and would like to pay my property taxes and insurance on my own. I own the home I am currently in and don't mind paying the tax and insurance bills once a year. I am looking to move up a little bit in housing, and if I get a loan I dont want to pay monthly escrows, because the bank always holds more than they need.
Is it a simple thing to do, or does the bank hold all the cards?
Is it a simple thing to do, or does the bank hold all the cards?
7
Posted on 11/2/12 at 11:54 am to slinger1317
Unless things have changed recently, it should be pretty easy to get the loan without escrowing T&I
Posted on 11/2/12 at 11:58 am to slinger1317
Be aware that the banks often increase your interest if you don't escrow. I would say it's a nonstarter if you don't have at least 20% equity.
Posted on 11/2/12 at 12:32 pm to slinger1317
It's pretty simple although you may or may not have to pay a higher rate. I let the bank handle it though, the difference is never more than a few hundred.
Posted on 11/2/12 at 1:20 pm to slinger1317
quote:
because the bank always holds more than they need.
how do you know that for sure when you don't know what lets say for example your insurance premiums will be next year?
Posted on 11/2/12 at 1:33 pm to Chad504boy
After we married, we sold my wife's house and got $800 from escrows. I paid off my house last year, and got a 2K check from escrow account. 2 different banks, so its not like it was one bank that was screwing us.
The bank holds the money, earns interest, and keeps interest when mortgage is cancelled. I would much rather write the checks myself.
The bank holds the money, earns interest, and keeps interest when mortgage is cancelled. I would much rather write the checks myself.
Posted on 11/2/12 at 1:42 pm to Chad504boy
If you have more than a 20% equity stake you do not have to escrow for Federally backed mortgages (FNMA/FHLMC/USDA/FHA). I am not sure but I think FHA/USDA you have to escrow no matter what. However, you wouldn't want to go USDA/FHA if you have 20% equity anyway. It is 1/8-1/4 hit to pricing to waive escrows. Not a big amount but it adds up over time. Also, they hold about two months of taxes and insuranc in reserves. That is for shortages, I believe they may give some of that back now with Dodd/Frank. It is easier to escrow, but more costly, depending on the rate.
Posted on 11/2/12 at 1:52 pm to slinger1317
quote:
After we married, we sold my wife's house and got $800 from escrows. I paid off my house last year, and got a 2K check from escrow account. 2 different banks, so its not like it was one bank that was screwing us.
no shite. i understand how escrow works. my point is that you don't know what your future bills will be so thats why they keep surplus.
Posted on 11/2/12 at 2:00 pm to Chad504boy
quote:
my point is that you don't know what your future bills will be so thats why they keep surplus.
??? Sure they do. They have a schedule for the escrow to ensure the right amount is in there. In fact if they project to have more than 1/12th of the amount in the account after paying the taxes and insurance, then they pay you a refund and adjust the escrow. They also adjust the escrow up if it looks like they will be negative. The sucky part is that the bank has a large amount of your money tied up earning no interest in places where taxes or insurance is large. here in TX my taxes are greater than my actual mortgage payment.
Posted on 11/2/12 at 2:06 pm to C
quote:
??? Sure they do.
No, they have no idea what your insurance bill is going to be 12 months from now.
Posted on 11/2/12 at 2:13 pm to Chad504boy
quote:
No, they have no idea what your insurance bill is going to be 12 months from now
Well my insurance has never gone up more than $100 a year in over a decade. It actually went down last year.
But that is why I would rather take the risk myself and pay what it actually costs, not pay the bank to make sure they are covered, then have them hand the money back to me with no interest.
Posted on 11/2/12 at 2:18 pm to slinger1317
quote:you must not be from my neck of the woods.
Well my insurance has never gone up more than $100 a year in over a decade. It actually went down last year.
But that is why I would rather take the risk myself and pay what it actually costs, not pay the bank to make sure they are covered, then have them hand the money back to me with no interest.
Posted on 11/2/12 at 4:08 pm to slinger1317
Very Possible. Some lenders will make you use a higher interest rate while others will hit you with a fee during closing.
Posted on 11/2/12 at 5:36 pm to slinger1317
We don't escrow ... we pay our own taxes and insurance.
We refinanced in 2002 ... don't remember having a "fee" or having a higher rate.
We refinanced in 2002 ... don't remember having a "fee" or having a higher rate.
This post was edited on 11/2/12 at 5:40 pm
Posted on 11/2/12 at 5:39 pm to slinger1317
Well my insurance has never gone up more than
Mine has ... it doubled. Fing Citizens.
quote:
$100 a year in over a decade. It actually went down last year.
But that is why I would rather take the risk myself and pay what it actually costs, not pay the bank to make sure they are covered, then have them hand the money back to me with no interest.
Mine has ... it doubled. Fing Citizens.
Posted on 11/2/12 at 6:06 pm to slinger1317
Depends on the bank and how you qualify. Some have a policy that there is no extra cost if you do not want to escrow. Some charge about 1/8 of a point extra if you do not escrow.
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