A couple years ago, I wrote about how my mortgage company consistently mis-calculated my monthly escrow payment, arriving at figures that were either too high or too low, depending on the time of year the escrow analysis was done. Well, this past summer, the mortgage company ran another analysis and again came up with a figure that would have had me paying too much into escrow. When this has happened in the past, we’ve called them and had them correct it, a process which typically involves sending a fax and spending about an hour on the phone. This year, though, we decided to ask them what it would take to waive the escrow requirement on the account. I figured that I’m responsible enough to set aside money for insurance and taxes on my own, and I stay on top of our local property tax rates, so I can do a better job anticipating these expenses than the mortgage company can.
Canceling the escrow account was easier than I had anticipated. There were, however, a bunch of prerequisites. Going from memory, they were:
- A 12-month history of no late or missed payments
- A 75% loan-to-value ratio (in other words, you need at least 25% of the property’s appraised value in equity)
- No escrow disbursements due in the next 60 days
When we initially called, they checked to ensure that we met these requirements, then they mailed us a waiver which we needed to sign. This arrived after about a week. We signed it and faxed it back to them (along with a brief cover letter). Within 24 hours of sending the fax, they had canceled the escrow account. After another week, we received a check for the balance of the account. All in all, it was straightforward and painless, and now they just bill us for principal and interest each month. For taxes and insurance, we set money aside separately each month, which we can now do accurately, setting aside only what’s needed.
We were happy that our mortgage company was willing to waive the escrow account without too much fuss. If you’re in a similar situation, you might consider checking with yours and see if they’ll work with you. If not, there’s always the option of refinancing into a mortgage with no escrow account. At today’s interest rates, that may make sense for a lot of people; in our case, the interest savings would only barely outweigh the closing costs, so for now, it was easier to waive the escrow account and stick with our current mortgage.