From the monthly archives:

December 2008

December 6, 2008

My fixed rate mortgage payments keep changing from year to year. Am I missing something?

Each period mortgage payment is in fact a combination of several payments: towards the interest, towards the principal (if the mortgage is not interest-only) and optionally towards PMI and the escrow. With a fixed rate mortgage the interest and the principal parts are usually unchanged unless you make extra payments, but the PMI and/or the [...]

December 6, 2008

How do I know if my escrow works?

The RESPA requires the lender to provide initial and annual escrow account statements. Do make sure you get one. But for the “good to know” feel, it is your proof in any legal procedure should you find out something is wrong with your escrow account. You always need to check with the other party, too [...]

December 6, 2008

How much is an escrow payment?

Before you buy a house, contact the county property appraiser and tax collector to find out how much the fully assessed property taxes will be, as well as an insurance agent for an estimate of how much your homeowner‘s insurance premiums will be. Find out about other payments to be placed in escrow. Sum all [...]

December 6, 2008

Do I always have to agree to have an escrow attached to my mortgage?

Generally speaking, mortgage escrowing is not mandatory. In fact, sub-prime mortgage market offers mortgages without any escrows, which I personally find very weird, because sub-prime borrowers are a lot more likely to have problems paying taxes and insurance. Escrow payments, naturally, make overall monthly mortgage payments higher and thus less attractive to such borrowers. A [...]

December 6, 2008

How can I cancel my mortgage escrow?

You have to buy your way out straight away at closing or any time later. It may not be easy, though. Lenders and servicing agents make pretty good income on escrows, so they will not be eager to let you get away with that easily. You may have to be very insistent, persistent and determined [...]

December 6, 2008

Is there any advantage in escrowing with the lender?

Yes, there certainly is. If everything works as well as it should, the escrow service will save you the personal headache of keeping up with the property tax and insurance payments schedule all through the years of your mortgage. Even the loss of a certain amount to the interest that the lender is going to [...]