This broker says he can get me a lower interest rate on my mortgage if I pay the taxes each month along with the mortgage to a bank. Is this for real or a scam?

Asked by Martha

6 Answers

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Answered by Brian Howell, Mortgage Broker in Castle Rock, CO
Hi Martha,

Forgive me for answering this question twice, but I want to make sure you have what you need to make a decision. Typically, lenders require that you escrow taxes and insurance though that's not always the case. When taking out a loan, most borrowers will create an escrow account where the taxes and insurance are paid along with the mortgage payment. I don't know of any banks that give you a lower interest rate for doing that. If so, it would be a minor amount at best, possibly one eighth of a percentage point. Can you provide any more details so I can give you a more complete answer?

Thanks,
Brian Howell
The Mortgage Network
| 01.16.14 @ 15:33
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$commenter.renderDisplayableName() — {comment} | 12.11.16 @ 00:30
Answered by Kim Miller, CFP®PRO+ in Redmond, WA
Yes, many banks will SLIGHTLY reduce the interest rate on a loan if you set up an escrow account with them for taxes and insurance. Good luck! | 09.18.14 @ 16:52
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$commenter.renderDisplayableName() — {comment} | 12.11.16 @ 00:30
Answered by Ted Rood, Mortgage BrokerPRO+ in Maryland Heights, MO
Fannie Mae/Freddie Mac have a surcharge of .25% (in most states) of the loan size as an added cost for borrowers who choose not to escrow. The cost is slightly less in some states. It's typically not enough to change your actual RATE, it's more of an adjustment on the costs of the loan. .25% of a 100K loan is $250. Whether it's worth the extra money to not escrow is a personal decision, but it's important to remember, you've got to pay the taxes/insurance whether you're escrowing or not! | 03.28.15 @ 06:23
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Ted Rood, Mortgage BrokerPRO+ in Maryland Heights, MO — Also note that the surcharge for waiving escrows does not apply in California, borrowers there with 20%+ equity can pay their own taxes/insurance without incurring any additional costs on their loans, | 08.21.15 @ 04:05
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$commenter.renderDisplayableName() — {comment} | 12.11.16 @ 00:30
Answered by Ted Rood, Mortgage BrokerPRO+ in Maryland Heights, MO
This doesn't seem like that tough of a question. Escrow accounts for conventional loans for borrowers with 20%+ equity are optional. In most states, a borrower choosing NOT to escrow will have a pricing adjustment to his loan of .25% (or $250 on a $100,000 loan). | 09.08.15 @ 19:53
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$commenter.renderDisplayableName() — {comment} | 12.11.16 @ 00:30
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Answered by dskow
For real, most lenders will charge a .25% " waive reserves " fee if you choose to pay you own taxes and insurance | 11.17.15 @ 21:37
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$commenter.renderDisplayableName() — {comment} | 12.11.16 @ 00:30
Answered by Caroline Gerardo, C G Barbeau in Newport Beach, CA
In California - there is no pricing add for choosing to not have impounds for Tax or insurance. Frankly the difference is nominal. If you are a good saver it is better to review bills annually and pay yourself | 11.18.15 @ 23:14
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$commenter.renderDisplayableName() — {comment} | 12.11.16 @ 00:30
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Answered by

Kim Miller
Kim Miller, CFP®PRO+ in Redmond, WA

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