Altogether
Posted on August 25, 2008 - Filed Under Business, Housing |
From last week, I thank you for your input. Now I ask for it one more time.
This particular conversation I have with people seems to generate some bizarre looks. I’d just like to know if I’m flying solo on this one.
When going through the escrow process, the lender typically asks if the borrower wants their taxes, insurance, etc impounded as part of their mortgage payment. There are two schools of thought regarding this feature.
(1) The borrower declines this service. Granted it does keep the monthly payment lower but it keeps property taxes and what not as a separate expense. Most people realize taxes are coming due and sacrifice two or a dozen paychecks to pay it off. Some people may be diligent, putting this money away in some account somewhere. They claim you get interest off this money, while it’s sitting in this account.
(2) The borrower accepts this service. The payment per month is higher but come tax season, the lender pays the taxes for the borrower. Insurance is paid each year as well.
This service is offered to everyone, whether they invest in real estate or not. The question: Do you have your taxes, what-not impounded (ie pay extra each month and have the lender pay these expenses)?
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I always that this was required with a mortgage because it reduces risk to the lender. In other words, the lender knows that your house is insured and your taxes are paid. Maybe it’s a Massachusetts thing.
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@Merch: It must be something with Massachusetts. Each time I’ve spoken with a lender, from various states, they’ve asked if I want the fees impounded or not. I do for less hassle. For sure!