COMMUNITY FORUM

Wolley

02:52PM | 03/18/03
Bvrealestate
Hi! I offered to my mortgage company to pay my taxes for the next year in full when I signed for the mortgage, but they insist in taking the money each month in my banking account. I would like to pay the taxes in full right away, because my father has given me the money to do so. I would rather pay my taxes right away than keeping that money sitting in my account, at 0,25% interest per year. Can they force me to pay escrow, even if I pay in advance the full amount? Thanks.

rpxlpx

03:43AM | 03/20/03
Member Since: 03/13/00
1675 lifetime posts
I believe they can do that. They really have control because they can say "If you don't agree with the way we do it, go to another lender."

Paying this year doesn't guarantee you will pay next year and the year after. They collect money in advance as a safety for them. Generally, that includes money for insurance as well as taxes.

It makes sense that a lender would need a guarantee that the taxes and insurance are paid. If the place was "taken" for back taxes, or if it burned down, how would the lender ever get you to continue to pay the mortgage for the next 30 years?

ksdesigns

04:59PM | 03/20/03
Member Since: 01/13/03
25 lifetime posts
i just refinanced on my house and settled on another and on both of them i am not escrowing the taxes and insurance. i was told that some companies do require it and others will not if you ask/tell them that you want to pay it. Interestingly enough, in a lot of places, if you pay your taxes early then you can sometimes get a discount on it. ask your lender and look at your mortgage papers.

Wolley

06:53PM | 03/25/03
Thanks for the reply. The lender I chose is the one who charges the least interest (5%). I guess I will have to put the money in my account and accept to pay escrow. Thanks!

rmurray223

04:56PM | 04/03/03
Member Since: 01/03/03
97 lifetime posts
you should have the option to have an escrow account or to not, that is not a lender specific thing. the only real reason to have an escrow for taxes is just to budget yourself without thinking about it. if you dont want it dont get it, simple as that.

treebeard

01:18AM | 04/04/03
Member Since: 01/14/03
264 lifetime posts
Yes, it is, indeed, a lender specific thing. If the prospective lender requires the buyer to pay into an escrow account and the buyer is balking at that, the buyer has only one choice...find another lender. The lenders use the escrow as protection for themselves against any failure on the part of the buyer to pay property taxes, thereby invoking the lawful right of the town/city to commence legal actions to "take" the property for back taxes. Those situations are lose/lose for everyone involved. The town has to spend monies on the proceedings that it can only recoup upon successful prosecution of the case. The buyer loses the house. And the lender loses the time and money on investment during the proceedings. Money it does not want to lose, and time it can't afford, for time is money in the lending business. So, yes, it is very much lender specific. It's the lenders call, not the buyers.

Of course, there are lenders out there who might allow for the buyer to pay his/her own taxes, but usually that is based upon due diligence findings that the buyer has good credit and no history of financial failure.

rmurray223

09:38PM | 04/10/03
Member Since: 01/03/03
97 lifetime posts
Well perhaps it is different in different states because up here you have the option of having an escrow or not, and being a realtor I have used many different lending facilites in my transactions.

derrikd

12:16PM | 08/20/03
Member Since: 08/19/03
4 lifetime posts
Actually this is mortgage specific. You should have signed a disclosure and mortgage at time of closing. Most lenders allow you to opt out of escrow after two years. But it depends on what the docs said at closing.
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