Tuesday, March 15, 2005

Mortgage Escrow - Decision

For those following along at home, my attempt to get my mortgage company to allow me to handle the escrow payments (hazard insurance and property taxes) myself came to its conclusion today. (Previous details are here and here.) The letter from them reads as follows:

This letter is in response to your letter received on February 18, 2005, requesting a waiver of the escrow account on your mortgage loan.

The terms of your mortgage require that your mortgage company escrow for payment of taxes and/or insurance. Once established, XYZ Mortgage requires that the escrow account be maintained for the life of the loan. Therefore, we are unable to honor your request to terminate the escrow payment.

Your payment continues to include principal, interest, and escrow. XYZ Mortgage will not accept partial payments on your mortgage loan.

Well, it was worth a shot. Won't know if you don't ask, right?

At this point, I suppose I could refinance to another lender who'd allow me to handle the taxes and insurance myself. But I really do not want the refi hassle. Besides, my current mortage is of the 15-year, 5.5% fixed variety, and I'm not likely to do much better than that at this time. Also, my MCC Credit Certificate means the federal government reimburses me for 50 percent of my mortgage interest each year in the form of a tax credit. So my effective mortgage rate is really 2.75 percent.

If I refi, I'll have to pay all the usual closing costs, plus the fee (I seem to recall $150, but that is probably wrong) to transfer the MCC to the refinanced mortgage. Unless I could get a significantly better rate than 5.5 percent, then this seems a pretty silly way to spend all that money ... just so I could get rid of the escrow account.

Ah well. You can't win 'em all.


— Posted by Michael @ 11:21 PM


I've never heard of the MCC, thanks for mentioning it. (I'm going to be looking for a house soon, this is going to huge if it applies)


It's a great thing to try for, if your municipality offers it. We had to jump thru a ton of hoops to get our hands on our MCC, but it was worth it.

I suspect there are still income qualifications for the program. Back when we bought our home, in order to qualify for the MCC program, you could not have a household income of more than $25,100.

My wife and I just BARELY squeezed in beneath that.


I'm sorry this didn't work out for you, but I'm really thankful you posted about it. When I refi'd last august, we opted to pay for our own insurance (with a single yearly payment) but I am definitely considering giving the taxes a shot too come this august now that you've laid out a "how to". Thanks for the inspiration!


Hey, it's MY fault for signing up with a mortgage company that contracts the escrow into its product. Besides ... this isn't a matter of life or death. Just something I needed to try!

Glad yours is working out well!

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