bethany102399
Pearl Clutcher
Posts: 3,486
Oct 11, 2014 3:17:29 GMT
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Post by bethany102399 on Feb 12, 2018 20:09:36 GMT
When we were purchasing our home in 2016, I know I came here and asked a lot of questions about homeowners insurance and escrow. Somewhere along the line someone shared that when you have lived in your home a certain amount of time, you can take over the insurance and property taxes yourself.
My mom, who is a senior and on a fixed income, got her bill from her mortgage bank, they were yet again raising her interest rate on her almost paid off home. She was in a blind panic about trying to pull money to be able to pay it every month.
I mentioned that she could pay the Insurance and property taxes herself, and not have the bank making money off her escrow. She didn't think that was legal. I said yes, yes it is the peas told me! Low and behold she called the county and why yes, she can do that, and it will lower her mortgage payment AND the money for Insurance and Taxes will go into a personal account that pays HER back, not the bank. She was so relieved and excited not to feel like she needed to frantically pay off the house.
so from my mom a HUGE thank you to whomever shared that tidbit with me. It truly helped her out and lifted a huge weight off of her shoulders.
Now if I can just get her to sell the house and move somewhere where the upkeep is not as much of a strain on her increasingly limited abilities we'll be doing even better.
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lesley
Drama Llama
My best friend Turriff, desperately missed.
Posts: 7,158
Location: Scotland, Scotland, Scotland
Jul 6, 2014 21:50:44 GMT
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Post by lesley on Feb 12, 2018 20:21:38 GMT
The Peas seriously rock!
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Post by stingfan on Feb 12, 2018 20:25:51 GMT
Has she actually gone through the process to transition from the mortgage company? When I looked into it, my mortgage company was going to charge me a not-small fee to make the change. They make money off my escrow account, so they weren't going to let me do that without me paying the price.
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bethany102399
Pearl Clutcher
Posts: 3,486
Oct 11, 2014 3:17:29 GMT
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Post by bethany102399 on Feb 12, 2018 20:26:57 GMT
Has she actually gone through the process to transition from the mortgage company? yes, and yes she has to pay a one time fee. She feels it's worth it to get the Insurance and Taxes out of the mortgage company's hands.
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peasquared
Drama Llama
Posts: 5,395
Jul 6, 2014 23:59:59 GMT
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Post by peasquared on Feb 12, 2018 20:46:52 GMT
That's great for your mom. I have learned so much on this board. I don't know what I'd do without my fellow peas!
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Post by Darcy Collins on Feb 12, 2018 21:07:00 GMT
The biggest risk with this is she doesn't actually put that money aside to pay the insurance and taxes when they're due. Interest rates are really not that high, so it's not like she's going to be making that much with the money in her own account. If she can't afford the monthly escrow in addition to the mortgage payment, it's highly likely that she won't have the money put aside to pay the taxes and insurance premiums when they're due. Just be aware - this could become a huge issue in a handful of months when she needs to make lump payments and doesn't have the funds.
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Post by malibou on Feb 12, 2018 21:08:57 GMT
I could wax poetic for days on all the wonderful tips, tricks, need to know info I have learned thru the peas. And then add to that all the times a pea has been able to pull off something awesome for another pea, and hotdog, I think to myself, what an honour it is to be here.
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Post by Mary_K on Feb 12, 2018 21:18:54 GMT
I didn't think it was possible for the bank to raise your interest rate? Also, The biggest risk with this is she doesn't actually put that money aside to pay the insurance and taxes when they're due. Interest rates are really not that high, so it's not like she's going to be making that much with the money in her own account. If she can't afford the monthly escrow in addition to the mortgage payment, it's highly likely that she won't have the money put aside to pay the taxes and insurance premiums when they're due. Just be aware - this could become a huge issue in a handful of months when she needs to make lump payments and doesn't have the funds. I'm kinda agreeing with this. Mary K
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Post by Darcy Collins on Feb 12, 2018 21:20:02 GMT
I didn't think it was possible for the bank to raise your interest rate? Also, The biggest risk with this is she doesn't actually put that money aside to pay the insurance and taxes when they're due. Interest rates are really not that high, so it's not like she's going to be making that much with the money in her own account. If she can't afford the monthly escrow in addition to the mortgage payment, it's highly likely that she won't have the money put aside to pay the taxes and insurance premiums when they're due. Just be aware - this could become a huge issue in a handful of months when she needs to make lump payments and doesn't have the funds. I'm kinda agreeing with this. Mary K They can if it's an adjustable rate mortgage.
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keithurbanlovinpea
Pearl Clutcher
Flowing with the go...
Posts: 4,243
Jun 29, 2014 3:29:30 GMT
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Post by keithurbanlovinpea on Feb 12, 2018 21:32:54 GMT
I didn't think it was possible for the bank to raise your interest rate? Also, I'm kinda agreeing with this. Mary K They can if it's an adjustable rate mortgage. Indeed if it is an ARM the interest rate will change based on the terms. The bank doesn't arbitrarily change your rate. They follow the index, and basis points above it, at whatever interval is specified. I've been in mortgage servicing for more years than I care to remember. I have seen some whack ass products out there, and borrowers chew us out for the terms. SMH You signed it! You should have read and understood that contract before you inked it. In any case, congrats to the OP's mom for making whatever needs to happen go thru. And yes, be mindful that she puts away 1/12th of the annual amounts, plus a little extra to account for the inevitable increases in taxes and insurance, plus HOA dues if applicable
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Post by tiffanyr on Feb 12, 2018 21:38:52 GMT
The biggest risk with this is she doesn't actually put that money aside to pay the insurance and taxes when they're due. Interest rates are really not that high, so it's not like she's going to be making that much with the money in her own account. If she can't afford the monthly escrow in addition to the mortgage payment, it's highly likely that she won't have the money put aside to pay the taxes and insurance premiums when they're due. Just be aware - this could become a huge issue in a handful of months when she needs to make lump payments and doesn't have the funds. This is very true! Our neighbors lost their house because they weren't making the insurance and taxes!
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Post by Mary_K on Feb 12, 2018 21:52:04 GMT
They can if it's an adjustable rate mortgage. Got it - didn't even think of an ARM! Any chance of refi to a fixed? Mary K
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keithurbanlovinpea
Pearl Clutcher
Flowing with the go...
Posts: 4,243
Jun 29, 2014 3:29:30 GMT
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Post by keithurbanlovinpea on Feb 12, 2018 21:58:02 GMT
They can if it's an adjustable rate mortgage. Got it - didn't even think of an ARM! Any chance of refi to a fixed? Mary K OP said the mortgage was almost paid off. No savings in refinancing if the payment is mostly going to principal. Hopefully it's the kind of ARM that reamortizes and there's no balloon payment.
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IAmUnoriginal
Pearl Clutcher
Posts: 2,894
Jun 25, 2014 23:27:45 GMT
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Post by IAmUnoriginal on Feb 12, 2018 22:28:49 GMT
Contact your mom's home insurance company. When a client self-pays, many carriers offer Automatic Monthly Payment plans where 1/12th of the premium is drawn from your checking account each month. The company I work for offers the same premium for full-pay clients and those that provide their checking info for the automatic premium payments. You don't have to worry about setting aside the premium or missing an invoice that only shows up once a year.
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caangel
Drama Llama
Posts: 5,413
Location: So Cal
Jun 26, 2014 16:42:12 GMT
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Post by caangel on Feb 12, 2018 23:10:50 GMT
We have always paid our own insurance and taxes. I think we did receive a slightly higher (very minimal) interest rate last time we refinanced because of it but it wasn't a big deal. They did say they don't do many like that any more.
Glad you mom was able to make a change. I hope it works for her.
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caangel
Drama Llama
Posts: 5,413
Location: So Cal
Jun 26, 2014 16:42:12 GMT
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Post by caangel on Feb 12, 2018 23:13:05 GMT
We have always paid our own insurance and taxes. I think we did receive a slightly higher (very minimal) interest rate last time we refinanced because of it but it wasn't a big deal. They did say they don't do many like that any more. Glad you mom was able to make a change. I hope it works for her. We are billed for insurance almost every month (10 months). And we save 1/12th of our property tax amount each month which goes into its own account. Capital One 360 (formerly ING) allows you to have several different accounts for free.
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bethany102399
Pearl Clutcher
Posts: 3,486
Oct 11, 2014 3:17:29 GMT
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Post by bethany102399 on Feb 13, 2018 1:06:10 GMT
They can if it's an adjustable rate mortgage. I can't believe dad would have set up an ARM when they bought the house almost 20 years ago. She was venting to me, and could have said interest rate when she meant a different cost had gone up. THe bank they have had their mortgage with since they bought their first house in the 1960s sold to a larger conglomerate last year. They have continued to add fees and make changes that has caused her to truly dislike them. Heck, I closed the account my parents opened for me when I was an infant with them due to the fact that they were going to charge me for having less than a certain amount in the account at all times- something like over 100k. I'm not concerned about her making the payments, we did discuss this when I brought it up. but thank you IAmUnoriginal I will have her set up the monthly billing with her insurance company.
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Post by Darcy Collins on Feb 13, 2018 1:45:16 GMT
They can if it's an adjustable rate mortgage. I can't believe dad would have set up an ARM when they bought the house almost 20 years ago. She was venting to me, and could have said interest rate when she meant a different cost had gone up. THe bank they have had their mortgage with since they bought their first house in the 1960s sold to a larger conglomerate last year. They have continued to add fees and make changes that has caused her to truly dislike them. Heck, I closed the account my parents opened for me when I was an infant with them due to the fact that they were going to charge me for having less than a certain amount in the account at all times- something like over 100k. I'm not concerned about her making the payments, we did discuss this when I brought it up. but thank you IAmUnoriginal I will have her set up the monthly billing with her insurance company. Hmmmm. Something sounds off. Will she let you look at the paperwork?
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bethany102399
Pearl Clutcher
Posts: 3,486
Oct 11, 2014 3:17:29 GMT
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Post by bethany102399 on Feb 14, 2018 15:43:13 GMT
Hmmmm. Something sounds off. Will she let you look at the paperwork? I talked to mom, the bank wants her to pay 2 years worth of Escrow. That's why she was freaking out about making the cost. Next year they want her to pay 3 years worth of escrow. Yes, she is in an ARM, which is why her interest rate is going to up. but there is no balloon payment. She can pre-pay without penalty it's in her mortgage document. Thank you guys for questioning me on this. It's led to a productive conversation with her about finances that I had been dreading as it's a reminder to her that I will need to take over at some point and I don't want her to feel threatened about money. Right now she can handle her own finances, but there will come a point when she cant. I got good information from her that I need to know when the time comes.
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Post by Darcy Collins on Feb 14, 2018 15:53:48 GMT
Hmmmm. Something sounds off. Will she let you look at the paperwork? I talked to mom, the bank wants her to pay 2 years worth of Escrow. That's why she was freaking out about making the cost. Next year they want her to pay 3 years worth of escrow. Yes, she is in an ARM, which is why her interest rate is going to up. but there is no balloon payment. She can pre-pay without penalty it's in her mortgage document. Thank you guys for questioning me on this. It's led to a productive conversation with her about finances that I had been dreading as it's a reminder to her that I will need to take over at some point and I don't want her to feel threatened about money. Right now she can handle her own finances, but there will come a point when she cant. I got good information from her that I need to know when the time comes. [ FYI the bank has to follow federal guidelines on escrows - what you’re describing is illegal. She is either not understanding what the bank is changing or one of her payments coming out of escrow has gone up dramatically. The bank cannot hold 2 or 3 times the annual payments in escrow.
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bethany102399
Pearl Clutcher
Posts: 3,486
Oct 11, 2014 3:17:29 GMT
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Post by bethany102399 on Feb 14, 2018 16:01:12 GMT
FYI the bank has to follow federal guidelines on escrows - what you’re describing is illegal. It would not surprise me to find out the bank is trying to work around the legalities of escrow. One of the reasons I left them is because I did not agree with the fees they wanted to charge me. She has literally pulled all of her business but the mortgage from them.
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Post by chedanemi on Feb 14, 2018 16:49:15 GMT
We have always paid our own insurance and taxes. I think we did receive a slightly higher (very minimal) interest rate last time we refinanced because of it but it wasn't a big deal. They did say they don't do many like that any more. Glad you mom was able to make a change. I hope it works for her. We too have always paid our own insurance and taxes. We actually received a slightly lower interest rate as they didn't have to set up any escrow account with our mortgage. Ours is through a credit union. Bonus... we're able to put our insurance and taxes on our credit card and get the double points too! I'd pay our mortgage via credit card if they'd let me!!
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keithurbanlovinpea
Pearl Clutcher
Flowing with the go...
Posts: 4,243
Jun 29, 2014 3:29:30 GMT
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Post by keithurbanlovinpea on Feb 14, 2018 16:52:23 GMT
I talked to mom, the bank wants her to pay 2 years worth of Escrow. That's why she was freaking out about making the cost. Next year they want her to pay 3 years worth of escrow. Yes, she is in an ARM, which is why her interest rate is going to up. but there is no balloon payment. She can pre-pay without penalty it's in her mortgage document. Thank you guys for questioning me on this. It's led to a productive conversation with her about finances that I had been dreading as it's a reminder to her that I will need to take over at some point and I don't want her to feel threatened about money. Right now she can handle her own finances, but there will come a point when she cant. I got good information from her that I need to know when the time comes. [ FYI the bank has to follow federal guidelines on escrows - what you’re describing is illegal. She is either not understanding what the bank is changing or one of her payments coming out of escrow has gone up dramatically. The bank cannot hold 2 or 3 times the annual payments in escrow. Yup this. Per RESPA they can only hold a max of 2 months cushion. Unless she had some weird mortgage product not regulated by the government. I'm guessing something isn't being fully understood.
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keithurbanlovinpea
Pearl Clutcher
Flowing with the go...
Posts: 4,243
Jun 29, 2014 3:29:30 GMT
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Post by keithurbanlovinpea on Feb 14, 2018 16:54:41 GMT
I will add on... I used to do a lot of escrow work in mortgage servicing. I'm happy to review the escrow analysis statement if you'd like. You can redact all the personal information so I just see the figures. I can even do all manual analysis if needed. [Gah I'm throwing it back old school.]
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bethany102399
Pearl Clutcher
Posts: 3,486
Oct 11, 2014 3:17:29 GMT
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Post by bethany102399 on Feb 14, 2018 17:16:59 GMT
keithurbanlovinpea , thank you that's very generous. I doubt she'd give me access to the paperwork. Her statement to me when I gently inquired about what set her off is they sent her a statement detailing how much it was going to go up this year, and how much it would go up next year and why. I just read their profile page on the BBB, and it's full of complaints about their loan dept. You're right that something is rotten in Denmark, but my primary concern is with mom being able to make the payments on the taxes and insurance. At this point the less the bank is involved, the lower her risk if things are as sketchy as they appear to be. I was flabbergasted that she is in an ARM, I can't believe dad would have set that up (he was a numbers guy) but at the time they got the loan, the housing market was very different than it is today. At the end of the day, She was able to get herself into a better situation with regard to her mortgage, and we were able to have a good conversation about money which I appreciated. My honest hope is that I can get her to put the house on the market in the next 12-18 months, at which point we will pay off any remaining balance and walk away from that bank completely. Again you guys, thank you for your help and advice. I appreciate being able to come here and find answers, sometimes to questions I don't even know to ask.
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snyder
Pearl Clutcher
Posts: 3,889
Location: Colorado
Apr 26, 2017 6:14:47 GMT
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Post by snyder on Feb 14, 2018 21:11:41 GMT
I don't know much about how all the mortgages work, but did want to add that if your mom doesn't already participate in the senior homestead property tax exemption for your state. Not all states participate, but if your state/county participates it could saver her a chunk on her yearly property taxes. This site briefly explains it. Property Tax Exemption
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