Escrow

[RedLight]

I opened my mortgage statement and noticed that it went up $152. I have a fixed rate 30 year mortgage, BUT I pay my taxes and homeowners insurance through escrow. Well, they have decided that my taxes should go up to the extent of $1,800 this year. My question is...does anyone know if it is possible to remove the escrow payments and pay it by yourself? I know this is set up at closing, but I am wondering if Countrywide will let me remove it now. If would free up the 300+ a month and I can put that into an ING savings and make a little money on it. Does anyone know???

[kmb]

You have to see what the terms of your mortgage dictate. Sometimes the mortgage company requires you escrow (especially if you don't have much equity in the house), othertimes it is optional. If you pull out all your paperwork, I'm sure you will find something about escrow and their requirements.

[RedLight]

I will have to do that when I get home. Pull out the pile of paperwork and start digging. I did an 80/20 and countrywide is the 80%. Hopefully I can get this removed.

[AngelinaCatHub]

Redlight; don't you get a little interest in escrow? It is like a little savings account and at the tax deadline, you would not have to fork up a big pile of money. It would more/less be a shield against temptation also.

[fltoo]

Hi Red Light

Although your mortgage company holds your escrow interest free, it is not a good idea for most people to not have an escrow for taxes and insurance.

Although you have good intentions on saving money throughout the year for your taxes, chances are you might not and it will be very hard at tax time to come up with the several thousand dollars to pay your tax bill.

Not saying you won't be able to save it, but why take the chance?

Most mortgage companies require an escrow to insure against tax default.
Property tax liens do not follow the "first in place" recording law. They jump to the head of the class in regards to payment.

Also, unless this is new construction (where property taxes are levied on the raw land before the house was built), I would definitely call the tax department and challenge the increase. The value of houses is decreasing so property taxes increasing on a decreasing property sounds strange.

[RedLight]

I know what you guys mean. It can be very difficult to save the money for when taxes do eventually roll around. It just irks me that they got raised as taxes will actually be going down. I will be able to file with the homestead exemption and the appraisal on the house this year is 9,000 less that what we paid for it.

Escrow payment prior to last month:
$243.51

New Escrow payment:
Base Amount Needed: $302.61
Shortage Payment: $43.29
Reserve Requirement: $50.23

NEW TOTAL: 396.13

Our monthly payment went up just over $152. That is a lot when you are trying to create a new budget and build up a savings. Just really aggrivated is all.

[justplaintired]

We are in the same boat. Our payment went up in Nov and will stay up until they do their annual analyze this coming Nov. Indiana has property taxes so screwed up right now, who knows where it will go. I figure it like this, atleast I never have to worry about coming up with those large sums, it's there waiting for the insurance co and for my taxes. Our payment has been going up and down ever since we moved here 9 1/2 yrs ago and it's always our taxes or insurance. We are in a fixed rate mortgage 5.25% that's our biggest reason for wanting to keep our home.

If you have the escrowed stopped, wouldn't you still have to put back money on a monthly basises to always be sure you have it for those bills? Personally we just readjust our budget whenever the reanalyze our escrow. I think this Nov ours should drop slightly and then the following Nov it should drop considerable! Yippie!! Indiana capped taxes at 1% of properties value, which drops my taxes about $450 yearly.

[BnkrptcyLwyr]

Did you get your escrow analysis?

Did your taxes go up last year? Causing a shortage which needed increasing this year?

Or are you really expecting taxes to go up that much (or even close to that much)?

The Real Estate Settlement Procedures Act (RESPA) and the corresponding regulations limit the amount of the increase that can be used. There may be a violation a nice warning letter along with a "qualified written request" to the customer service division may prompt them to refigure the escrow amount.

But if the increase in taxes is expected to be accurate, then my suggestion is to let the escrow increase stand. Property taxes need to be paid. Cut back elsewhere (if possible).

[Flamingo]

I opened my mortgage statement and noticed that it went up $152. I have a fixed rate 30 year mortgage, BUT I pay my taxes and homeowners insurance through escrow. Well, they have decided that my taxes should go up to the extent of $1,800 this year. My question is...does anyone know if it is possible to remove the escrow payments and pay it by yourself? I know this is set up at closing, but I am wondering if Countrywide will let me remove it now. If would free up the 300+ a month and I can put that into an ING savings and make a little money on it. Does anyone know???

At settlement you signed papers for the escrow for your taxes and insurance to be withheld by the mortgagor. You would need to review those papers in order to see if it is possible to stop the escrow withholding and just pay principle and interest. I don't think it is possible but the documents will reveal the information you need. It appears that you may have had a shortage take place along with maybe an increase in your house insurance and property taxes for the coming year and they are balancing it out - They should send you a separate statement showing the breakown of what constitutes the $152 extra per month.

[BnkrptcyLwyr]

It appears that you may have had a shortage take place along with maybe an increase in your house insurance and property taxes for the coming year and they are balancing it out - They should send you a separate statement showing the breakown of what constitutes the $152 extra per month.

I agree with Flamingo, it sounds like there was a shortage.

ALSO, it depends on whether your prior escrow payments had the two month cushion added in (lenders can add a "cushion" to the escrow payments up to 1/6 of the estimated disbursements). It may be that the prior escrow payments did not include the cushion (lenders don't have to add it in) and that maybe with the shortage they decided to add it this time around. They're allowed to that.