Question: During one of the many discussions of home financing and >>re-financing, I believe a couple of people mentioned they did >>not pay their taxes and insurance through the usual escrow >>accounts. How is this done? Don’t the lending institutions >>require it? Or is this something you have to ask for and >>qualify for? I would be interested in choosing this option, >>if possible, when I re-finance.
>>Thanks for any info.
Answer: Normally you have to have at least a 20% equity position in your home before the lending institution will allow you to pay your taxes and insurance yourself. At 20% equity they no longer require you to carry private mortgage insurance (PMI). If you are at or above the 20% level be sure to tell the loan officer that you wish to pay the taxes and insurance on your own.
Simply put 1/12 of the annual amount into a savings account each month. When the bills come due, you’ll have the money on hand to cover the expenses. You will have also earned a few dollars in interest by so doing. Never pay PMI if you are over 20% equity. It is a ripoff. This insurance does not cover you for anything. It covers the LENDER in case of a default on your part.
Happy Refinancing!
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