Bank messing with my mortgage

[ERD50]

... Mortgages, in general, are a pain IMO.

Seems that most of the 'pain' I've read about and heard about from others is due to escrow, not the mortgage. I don't think I ever had an escrow, even on my very first mortgage.

Why involve a third party? Why pay in advance and lose earning/liquidity? There's nothing to be gained.

-ERD50

 

[thatguy]

Years ago on another mortgage my escrow went short. I had to figure out all the payments to escrow and all the disbursements from it. $300 somehow disappeared from the account. It took several calls and the work of figuring it out to get if fixed. This was before everything was on the internet. I've not had an escrow since.

 

[Walt34]

Seems that most of the 'pain' I've read about and heard about from others is due to escrow, not the mortgage. I don't think I ever had an escrow, even on my very first mortgage.

Lucky you. Not everyone has the option of not having escrow, it certainly wasn't for me the first two houses I bought.

One of the incentives for refinancing the second one with a different lender was that every year I'd get nastygrams from the County and the insurance company that the taxes and insurance hadn't been paid when due. The first time I refinanced (to get a lower rate) I specifically asked if escrow was required and by that time I had enough equity that escrow wasn't required so I jumped on that.

 

[CRLLS]

Seems that most of the 'pain' I've read about and heard about from others is due to escrow, not the mortgage. I don't think I ever had an escrow, even on my very first mortgage.

Why involve a third party? Why pay in advance and lose earning/liquidity? There's nothing to be gained.

-ERD50

Because that mortgage required us to escrow as many until the equity is over 20%. There was no 3rd party. All was handled by the mortgage lender, at least from our visibility. We would not have been able to purchase that home. That was something to be gained IMO.

 

[ERD50]

Lucky you. Not everyone has the option of not having escrow, it certainly wasn't for me the first two houses I bought.

One of the incentives for refinancing the second one with a different lender was that every year I'd get nastygrams from the County and the insurance company that the taxes and insurance hadn't been paid when due. The first time I refinanced (to get a lower rate) I specifically asked if escrow was required and by that time I had enough equity that escrow wasn't required so I jumped on that.

Because that mortgage required us to escrow as many until the equity is over 20%. There was no 3rd party. All was handled by the mortgage lender, at least from our visibility. We would not have been able to purchase that home. That was something to be gained IMO.

Maybe it is different i different states, but IME, everyone has the option of not having escrow.

In my case, I chose to save up enough for 20% down so I did not pay PMI, and that escrow was not required. That's the option.

-ERD50

 

[tulak]

I only had escrow on my first mortgage, because I didn’t know better. I’ve had many mortgages since, all without escrow.

It’s never been an issue for me and like ERD50 said, why pay in advance.

 

[Koolau]

I dunno. I've had mortgages sold and never had a problem. I don't escrow through them, so I think the only possible change would just be where to direct the auto-payment.

Time for me to update my spreadsheet, but mortgage arbitrage has worked well for me, certainly worth any 'pain' I might have endured.

But to each their own.

-ERD50

Not referring to ONCE it's sold - referring to BEFORE it is sold as I mentioned: The new (proposed) holder of the paper will have its own requirements (paperwork, hoops to jump through, etc.) The one I blew off was still asking for stuff up to the closing. YMMV

 

[Walt34]

Maybe it is different i different states, but IME, everyone has the option of not having escrow.

Not true in the Washington, D.C. area in the late 1970's and early 1980's.

In that area, at that time, it was either buy a house as soon as it was at all possible to do so and lock in the price and payments, or not buy a house at all. That was so because house prices were going up faster than almost anyone's paychecks. Certainly anyone that I knew.

Trying to save up a 20% down payment was a losing game.

 

[Retch The Grate]

wait, escrow is optional? This is our first house, they didn't tell us we didn't have to do escrow, I'd vastly prefer to be paying my insurance company and the county taxes directly. So is that just a change I can request?

 

[Another Reader]

A lot of lenders will allow you to pay taxes and insurance without escrow, but charge a higher rate for taking on the risk and hassle if you don't pay. Aimloan will allow you to choose and show a slightly higher rate if you choose not to escrow.

 

[Walt34]

So is that just a change I can request?

Absolutely! At least it was when I refinanced the first time. The bank didn't tell me, but didn't balk at all either when I asked.

YMMV of course because of different bank policies, state regulations, etc. but that was the case for me.

 

[thatguy]

I have conditional approval but they still want a bunch of documents too confirm income and stuff. It's still a PITA.

 

[jazz4cash]

wait, escrow is optional? This is our first house, they didn't tell us we didn't have to do escrow, I'd vastly prefer to be paying my insurance company and the county taxes directly. So is that just a change I can request?

I believe it will depend on the lender. Many local practices are customary but not mandatory. Some lenders/ services simply want to make a buck holding your funds. Paying taxes and insurance on time may be a legitimate concern for 1st time homeowners but if you have a track record of timely payments most quality lenders I’ve dealt with are willing to waive escrow. You need to ask/demand no escrow. Most of my friends and family think the lender is providing a service and only have a foggy idea of how their payment is divided.

 

[CRLLS]

Maybe it is different i different states, but IME, everyone has the option of not having escrow.

In my case, I chose to save up enough for 20% down so I did not pay PMI, and that escrow was not required. That's the option.

-ERD50

From Forbes website:

What is a Mortgage Escrow Account? A mortgage escrow account is an arrangement with your mortgage lender to ensure payment of your property tax bill, homeowners insurance and, if needed, private mortgage insurance (PMI). On most conventional mortgages, lenders require PMI if your down payment is less than 20%

When I said escrow, it was required for PMI. If PMI was required, the RE tax and Insurance was also required to be incorporated into that Escrow. It was just standard practice in 1983. Once the mortgage balance was < 80% of the purchase price, (possibly fair market value if we wanted to pay for an appraisal?) the PMI was dropped, and we could then ask to stop the escrow and pay the RE Tax and Insurance ourselves, which we did.

There simply was no option until <80% was outstanding.

 

[ERD50]

....

There simply was no option until <80% was outstanding.

The point was trying to make is that you have the option of avoiding escrow by putting 20% down. Personally, I think PMI is a bad financial move, so I always put 20% down. If I don't have 20%, I don't buy.

It is a choice/option.

FYI, I think that a few years ago the laws changed and you can't just drop PMI when you achieve > 80% equity, you actually have to take out a new loan?

-ERD50

 

[thatguy]

We closed today. New payment is $170 less. 2.74%. Term is 15y. I think we had 8y left on the original loan. The rate the quoted for 10y was higher. Payments will be automatic.
The payment is just less than 10% of our monthly pensions & social security deposits. I don't count my RMD as a bill paying source.
There is no prepayment penalty. It is likely we will at some time pay this off early as our income has some increases ahead. Feels good to have this done.

Everything was done with phone fax & email until the one bank visit today for signing closing documents.
We spent most of February in Florida while the bank was working on it.
The drive by appraisal was about 100k more than expected. Not sure I believe it.

 

[HarveyS]

Congratulations. I'm sure it feels good to have that in the rearview mirror.

I'm curious as to your thought process to nearly double the term remaining? Why did you go from an 8-year loan to a 15 year loan at this stage of your life? I'm in the camp of getting out of debt near the end of the game.

 

[ERD50]

Congratulations. I'm sure it feels good to have that in the rearview mirror.

I'm curious as to your thought process to nearly double the term remaining? Why did you go from an 8-year loan to a 15 year loan at this stage of your life? I'm in the camp of getting out of debt near the end of the game.

Why?

At these interest rates, why not keep your money working for you and/or your heirs? Sure, no guarantee, but the odds are very good historically. I'm not sure how "near the end of the game" plays into it?

-ERD50

 

[levindb]

Why?



At these interest rates, why not keep your money working for you and/or your heirs? Sure, no guarantee, but the odds are very good historically. I'm not sure how "near the end of the game" plays into it?



-ERD50

I do not have all of the numbers, but I am pretty sure the monthly payment went down because the number of remaining payments increased from 8 years (~96 payments) to 15 years (180 payments).

 

[thatguy]

Congratulations. I'm sure it feels good to have that in the rearview mirror.

I'm curious as to your thought process to nearly double the term remaining? Why did you go from an 8-year loan to a 15 year loan at this stage of your life? I'm in the camp of getting out of debt near the end of the game.

It was simply the rate was better for 15y. There's no restriction on paying it off faster. The important thing was getting rid of the ARM which had a ceiling of 11 or 12%.

 

[thatguy]

Actually there was 10y left on the original loan. 8y was a miss-calculated guess from memory.