Vital Info about Mortgage Escrow Accounts
In this week’s Conarchy’s Corner (length: 8 minutes) Ed Conarchy has very important information concerning mortgage escrow accounts that you need to hear. This time of year escrow accounts are reviewed and changed by mortgage companies. Learn how they do it. Most importantly: Ed shares a secret tip to save you money each month on your mortgage escrow payment.
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Tagged with: equity • Fannie Mae • FDIC insurance • Federal Reserve • Freddie Mac • mortgage • Property Taxes
2 Responses to Vital Info about Mortgage Escrow Accounts
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Ed Conarchy
Mortgage Advisor
NMLS # 215698
Providing Personal Mortgage Advice Since 1990
Cherry Creek Mortgage Company
495 N. Riverside Dr., Suite 206
Gurnee, IL 60031
Phone: (847) 970-4239
Fax: (847) 557-2088
Ed Conarchy NMLS # 215698
Licensed in Wisconsin, Illinois, Indiana and Michigan
Cherry Creek Mortgage Co., Inc. NMLS # 3001
Illinois Residential Mortgage Licensee # 0005759
Hi Ed,
Thanks very much for the information on escrow accounts. My lender in Oregon required an escrow account for taxes and insurance when I purchased my home in Dec. 2008.
I just received an escrow review and Suntrust had increased my payment by $334/yr because of their “guestimate” on tax/ins increases.
I requested the escrow be closed a week before I got this notice anyway. However, it is costing me as you pointed out. I owe a balance of around $197,000 on the home. How is the fee to close an escrow account determined? Is there a formula all lenders use?
I’m wondering if I can ask to pay the closing fee in installments. I’m also wondering if closing the escrow account was a wise decision on my part.
What do you think?
Thanks for your time,
Marilynn
Hi Marilynn,
You are very welcome. It’s my pleasure!
The fee to close your escrow or as we call it in the industry “waive your escrow” is usually the same for all lenders and is $250 per $100,000 loan amount. So in your case roughly $500. Some lenders will raise the rate to cover that cost as an option. Typically taking your interest rate up .125% to forgo having to charge you the $500.
This is typically done when you get your mortgage upfront and needs to be determined before you sign all the mortgage papers at closing. Once the mortgage is closed with an escrow account we have found it hard to get out of the escrow requirement down the road. Knowing you could always refinance to do that though.
If you are lucky and the bank does allow to close the requirement of the escrow and you are disciplined to set aside the property taxes and home insurance on your own, I recommend that. If you would not be disciplined enough to do that, keep the escrow.
I hope that helps and answers all your questions. Let me know if you have additional ones.
Thank you, Ed