I stand corrected. It's up to the lender. Note you probably need 20% down like conventional and most likely not select VA since no PMI On either loan but VA requires 2.25% fee added to the loan amount and conventional does not.

Unless you have a VA disability rating then the fee is waived.

https://www.valoans.com/articles/va-loans-require-escrow-account/


90% of VA loans are 100%. Makes sense to maximize the benefit. I know of no lender who would not want escrow with 100% financing.

https://www.valoans.com/articles/va-loan-down-payment-facts/

I can waive escrow at 100% on a VA loan.

Now, if it is a good idea for a first time home buyer, maybe not. But for a vet with experience owning that just wants to maximize what he/she borrowers at the rock bottom VA rates it can make a lot of sense to waive the escrow requirement.

Architelico said:

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wife was indicating the other day that a few of her colleagues pay their property taxes lump sum at the end of the year, as opposed to rolling into escrow, because it is cheaper. Is this accurate or FOS? If accurate, how much cheaper? Hays county.

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I escrowed on my first house and told myself I'd never do it again. The main reason why is they way overestimated my taxes and had to do some kind of reevaluation at the end of the first year. It was great because my monthly payment went down, but they wouldn't refund me the $2k that they overestimated and told me they had to keep that in for some kind of "safety" should they underestimate it now. Great, they're making money on my money.

With the next 2 houses, I haven't escrowed and have made some money on that money each year. Open up a high interest savings account with someone like American Express (who we have), Goldman Sachs, etc and just have what you'll need deposited directly into the account each pay period. We account for taxes, insurance (auto and homeowners), HOA, and some additional for future repairs. Probably the first week of January, I'll move over what is needed for taxes and then send a check to each. Yes, it hurts to see that account drop each January, but I look at the interest I made and feel a little (and I mean a little) better.

If you're disciplined enough to do it, I would highly recommend it. I would also recommend keeping that money separate from any other savings/safety net you may be saving for so you know exactly how much you have and whether or not you need to adjust.

jja79 said:

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If your taxes are $500/month and you were getting 1.5% return on a safe place to stash that money the interest is $0.63/month on each incremental deposit to the account. Not advocating either side but the opportunity cost isn't much.

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Sure, that's the interest on one payment for one compounding period. Over one year, that is $41.42. If I see two $20 bills on the ground, I'm bending over to pick them up.

Lenders, what happens if I put 20%+ down, escrow (and pay no fees to waive escrow), then call the servicer a year later and ask to waive the escrow? No fees with that route, correct?

The current servicer very well might require an escrow over 80% loan to value, so in that case they may require an appraisal be done to be sure you are under that threshold.

I advise my clients to escrow the first year and opt out. I have talked to my account reps and they say it will be ok. No one has ever came back saying I gave bad advice but as said It is up to the lender for final decision. Policies can change or loans get sold to a new lender.

Thanks y'all

TriAg2010 said:

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jja79 said:

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If your taxes are $500/month and you were getting 1.5% return on a safe place to stash that money the interest is $0.63/month on each incremental deposit to the account. Not advocating either side but the opportunity cost isn't much.

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Sure, that's the interest on one payment for one compounding period. Over one year, that is $41.42. If I see two $20 bills on the ground, I'm bending over to pick them up.

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Which is why I pointed out the incremental deposits.

one MEEN Ag said:

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Premium said:

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TXTransplant said:

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Property taxes are the same regardless of whether you pay them or your mortgage company pays them. Some mortgage companies won't let you waive escrow if you don't put 20% down, or they might charge a slightly higher interest rate if you don't escrow.

However, the mortgage company often overestimates what your escrow payment should be in order to "make sure" there is enough money in the account to pay the taxes. This is especially common on new builds that have no property tax history.

So, you could end up overpaying your escrow. You are entitled to request that overage be returned to you, but the process can take a couple of months.

This is why I don't escrow anymore and pay mine in a lump sum at the end of the year.

The mortgage company is also making money (interest) off of the money you (and all of their other customers) escrow.

Some people escrow so they don't have to worry about "saving" enough money for their property taxes. Others don't like writing a 5-6 figure check right at the end of the year/holiday time.

But paying them yourself doesn't get you any sort of "discount". It's just what's most convenient for you. Would you rather pay a little bit each month and have your mortgage company write the check(s) or write the check(s) yourself and pay one lump sum at the end of the year?

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6 figure check

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You don't pay $100,000+ in property taxes? Your username is literally Premium.

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I mean, I guess if I lived in River Oaks, but that's like a $10 Million house in Colorado or a $3-4 Million house in Houston.

The upkeep of a house the fraction of these sizes are a pain in the ass, and intrusive (really, both). I was just telling my wife I'd go for a $2-3 Million house, but it's got to be small. The value will be in the architecture and build material... and not in HOUSTON! Therefore, even at that level, I'm not near 6 figures based on location and $2-3 Million in value.

I don't understand there being a fee for NOT escrowing and taking care of the payments myself. How in the world does that warrant an added cost?

It is added risk for the lender. If you don't pay, especially over a couple of years, it is a big expense for the lender if they have to foreclose. Even if you pay the mortgage and not taxes it could lead to a lien that has a superior position on title. So they would have to pay it first before they can get their money.

With escrow they know the taxes are going to be paid

SteveBott said:

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It is added risk for the lender. If you don't pay, especially over a couple of years, it is a big expense for the lender if they have to foreclose. Even if you pay the mortgage and not taxes it could lead to a lien that has a superior position on title. So they would have to pay it first before they can get their money.

With escrow they know the taxes are going to be paid

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Is there any situation where you can get a "refund" of sorts of that fee for multiple years of successful payments and enough equity built?

No.

I escrow for convenience. I just review my documents each year. My lender sends me a check if there is money left over without me having to ask them.
The problem some here have mentioned, of the lender holding too much, has not been a problem for me.

It is being hit with a big unexpected tax bill half way through the year. The account got upside down for some reason and the lender will send a lump sum demand, for a sizable amount to absorb in the budget, or divide it up the rest of the year on the regular payment. Either way it stings.

Holding money I'm skeptical about the accuracy of those claims. Without knowing all the details I can't say. Escrows are regulated by federal rules and lenders will follow them or be subject to audit. That is the last thing they want because it could find other instances or other issues. None of want a tax audit and neither do they. Big fines can be levied. I'm talking millions.

But they do make mistakes and can be slow to act. Nature of Big companies

The way I look at it is that escrow requires monthly contribution. It affects your monthly cash flow. What if you get a bonus every year and you want to take some of that lump sum and apply it to your taxes? Then use less monthly cash flow to cover the difference? Escrow doesn't allow you that flexibility.

I never rely on a bonus for mandatory expenses. Maybe it's just me.

aTm2004 said:

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I never rely on a bonus for mandatory expenses. Maybe it's just me.

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where did I say rely?

Ragoo said:

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aTm2004 said:

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I never rely on a bonus for mandatory expenses. Maybe it's just me.

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where did I say rely?

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its pretty clear the poster was talking about themselves and not you. HTH.

Ragoo said:

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aTm2004 said:

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I never rely on a bonus for mandatory expenses. Maybe it's just me.

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where did I say rely?

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Where did I say you said you rely on it?

expresswrittenconsent said:

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Ragoo said:

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aTm2004 said:

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I never rely on a bonus for mandatory expenses. Maybe it's just me.

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where did I say rely?

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its pretty clear the poster was talking about themselves and not you. HTH.

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Exactly. If I don't get a bonus that year, the county gets to share in the joy!

aTm2004 said:

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Ragoo said:

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aTm2004 said:

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I never rely on a bonus for mandatory expenses. Maybe it's just me.

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where did I say rely?

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Where did I say you said you rely on it?

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you replied to my post where I offered one example of why escrow wouldn't be preferred.

In any case: I like the flexibility to fund at any time and not the requirement to fund as part of my monthly mortgage payment.