Self escrow question...

**nedirtbikr** · 05-12-2009, 07:06 AM

Not a Realtor here. Just a joe average homeowner trying to find where to start. Have an escrow question that I couldn't find using search.

About a year and a half ago, we bought a new house. 30 yr. fixed, traditional loan, escrow company. My question is...is it typical that a homeowner is obligated to use an escrow company? What I'd like to do is "self escrow" but am just not sure where to start (if I even can) on getting away from our current escrow company. It's not that we're having any problems with the current escrow company, I just see no reason to have them using our money (taxes / insurance) over the year to make interest when we could be using it ourselves.

We are disciplined financial people and we live in Nebraska. Any recommendations would sure be appreciated. Thanks!

**REITrainingWhse** · 05-12-2009, 07:20 AM

Originally Posted by nedirtbikr

About a year and a half ago, we bought a new house. 30 yr. fixed, traditional loan, escrow company. My question is...is it typical that a homeowner is obligated to use an escrow company?

First, you have a 3rd-party escrow company, and it is not the lender?? Generally I see that the homeowner sends in their monthly note payment, it includes the taxes and insurance escrow payment. Of course, the lender could then transfer it to a 3rd-party, but that is neither here or there. Do you write two checks??

As for are you obligated... Probably, since that is the terms of the note that you signed, as well as it is either in your mortgage or deed of trust. To remove it, you might need to refianance and make sure that you request that the taxes and insurance are not escrowed. You can always talk with your lender, maybe they will modify their terms and allow you to self-escrow... I guess it never hurts.

Later.

**Greg** · 05-12-2009, 08:08 AM

Lenders typically require escrow payment unless you have 20% equity in the property. So until you can save up enough to pay down your mortgage 20% or the property value appreciates by 20% you will have to keep paying.

**REITrainingWhse** · 05-12-2009, 08:46 AM

Originally Posted by Greg

Lenders typically require escrow payment unless you have 20% equity in the property. So until you can save up enough to pay down your mortgage 20% or the property value appreciates by 20% you will have to keep paying.

I heard that you need to pay PMI until you have 20% in EQ, but never heard about needing to have your taxes and insurance escrowed until you had 20% EQ. Interesting.

Oh well, I hardly go for lending these days... far too many available to take over subj-2.

Later!

**RedCarpetSchool** · 05-12-2009, 09:51 AM

If you have hit the 80% loan to value or 20% equity not all lenders will just go out and automatically drop the required escrow and typically you need to refi the loan at the new 80% loan to value and request that you do not make Escrow payments. You may need to go and get an updated appraisal and present it to your lender jump through the hoops they will have set for you to do to get the escrow payments removed.

Escrow payments are in the best interest of the bank as if you default at all the insurance and taxes will be paid up to allow time for the acceleration process.

**Vegasloanlady** · 05-12-2009, 12:57 PM

You have to do a refinance and get to a combo loan with a first mortgage at 80% of the appraised value and the remainder on a second mortgage. This will enable you to get rid of the escrow requirements.

**nedirtbikr** · 05-13-2009, 10:31 AM

Thank you all for your insights. We went into the buy with well over the 20% equity and have not paid PMI at all. Looks like the definite common denominator is the refi to "renegotiate" the escrow deal.

I'm going to visit with a local bank about refi and escrow. Thanks again for your input...very helpfull!

**luke8000road** · 05-14-2009, 02:51 AM

Originally Posted by REITrainingWhse

First, you have a 3rd-party escrow company, and it is not the lender?? Generally I see that the homeowner sends in their monthly note payment, it includes the taxes and insurance escrow payment. Of course, the lender could then transfer it to a 3rd-party, but that is neither here or there. Do you write two checks??

As for are you obligated... Probably, since that is the terms of the note that you signed, as well as it is either in your mortgage or deed of trust. To remove it, you might need to refianance and make sure that you request that the taxes and insurance are not escrowed. You can always talk with your lender, maybe they will modify their terms and allow you to self-escrow... I guess it never hurts.

Later.

i can always learn someting about RE through your replies for all kinds of questions. thx a lot.