Is Rejecting Escrow A Good Idea?
Okay, I am about to close on an investment property. When we started looking for the loan, I told the mortgage broker that I did not want to have an escrow impound account. My Broker now says that the investor (or Bank) will charge me 0.75% if I elect not to have the escrow account.
Is this customary to charge for not setting up and escrow? And if it is, is 0.75% a normal range?
The cost of setting up the escrow is equal to about five months of the escrow payments. My plan is to rehab the property and hopefully sell it within three months. My backup is to keep it as a rental if I can't flip it. Do you think it is worth paying to 0.75% to avoid escrow? Ultimately, I am still responsible for the taxes and insurance, I just don't believe in letting the mortgage co. have a free ride with my money.
Thoughts please.
Thanks,
JS.
I personally don't escrow any of my taxes and insurance, nor have I ever. The normal fee for an escrow waiver is .25% of the loan amount. It has been that amount since I bought my first duplex in 1988. And it is still that fee as of today. I just ordered docs on a loan and the fee was still the same. I would look into the reason it is higher.
LORI
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