Comments on: Is an Escrow Waiver Fee Worth It? http://thefinancebuff.com/is-an-escrow-waiver-fee-worth-it.html like a friend telling you about money ... Fri, 10 Feb 2012 17:31:35 +0000 hourly 1 http://wordpress.org/?v=3.1.2 By: TFB http://thefinancebuff.com/is-an-escrow-waiver-fee-worth-it.html#comment-5111 TFB Sun, 14 Nov 2010 02:35:21 +0000 http://thefinancebuff.com/2009/05/is-an-escrow-waiver-fee-worth-it.html#comment-5111 @Evie - I've never seen any charges for using an escrow account at closing nor any monthly service fees. I don't think paying the escrow waiver fee is worth it but you will have to see if it's worth it for you. First thing to find out would be if your state requires the bank to pay interest to you on the escrow balance. @Evie – I’ve never seen any charges for using an escrow account at closing nor any monthly service fees. I don’t think paying the escrow waiver fee is worth it but you will have to see if it’s worth it for you. First thing to find out would be if your state requires the bank to pay interest to you on the escrow balance.

]]> By: Evie http://thefinancebuff.com/is-an-escrow-waiver-fee-worth-it.html#comment-5109 Evie Sat, 13 Nov 2010 08:16:58 +0000 http://thefinancebuff.com/2009/05/is-an-escrow-waiver-fee-worth-it.html#comment-5109 Should I expect any additional escrow charges -- at closing -- in addition to prepaying property taxes and insurance for the first year plus 3 months? Doesn't escrow usually charge also monthly service fees? Would it be beneficial to waive the escrow even when the bank wants to charge $520 fee (0.25% on $208,000 loan). I can get annual interest of 2.75% on a checking account.. Should I expect any additional escrow charges — at closing — in addition to prepaying property taxes and insurance for the first year plus 3 months?

Doesn’t escrow usually charge also monthly service fees?

Would it be beneficial to waive the escrow even when the bank wants to charge $520 fee (0.25% on $208,000 loan). I can get annual interest of 2.75% on a checking account..

]]> By: TFB http://thefinancebuff.com/is-an-escrow-waiver-fee-worth-it.html#comment-3612 TFB Wed, 17 Mar 2010 17:16:13 +0000 http://thefinancebuff.com/2009/05/is-an-escrow-waiver-fee-worth-it.html#comment-3612 Rob - I agree with you on both points. I didn't go too fancy on this back-of-envelope calculation. At low interest rate for a few years, the time value of money won't change the result much. Instead of 4.4 years without time value of money, you may get 4.5 years with time value of money. For the interest rate changes, you can enter an expected average interest rate in the cell for "Interest rate in your own account" which is higher than the actual interest rate right now. Rob – I agree with you on both points. I didn’t go too fancy on this back-of-envelope calculation. At low interest rate for a few years, the time value of money won’t change the result much. Instead of 4.4 years without time value of money, you may get 4.5 years with time value of money. For the interest rate changes, you can enter an expected average interest rate in the cell for “Interest rate in your own account” which is higher than the actual interest rate right now.

]]> By: Rob http://thefinancebuff.com/is-an-escrow-waiver-fee-worth-it.html#comment-3611 Rob Wed, 17 Mar 2010 16:27:11 +0000 http://thefinancebuff.com/2009/05/is-an-escrow-waiver-fee-worth-it.html#comment-3611 I looked at the calculator you setup. The breakeven calculation doesn't consider the time value of money (compounding nature of interest). Wouldn't that change the years required to hit the breakeven point? Additionally, it doesn't consider any changes in the interest rate over time. Given the potential increases in interest rates that we may see over the next year (2010), the analysis should allow a user to estimate changes in interest rates. I looked at the calculator you setup. The breakeven calculation doesn’t consider the time value of money (compounding nature of interest). Wouldn’t that change the years required to hit the breakeven point? Additionally, it doesn’t consider any changes in the interest rate over time. Given the potential increases in interest rates that we may see over the next year (2010), the analysis should allow a user to estimate changes in interest rates.

]]> By: TFB http://thefinancebuff.com/is-an-escrow-waiver-fee-worth-it.html#comment-2675 TFB Fri, 11 Sep 2009 04:55:44 +0000 http://thefinancebuff.com/2009/05/is-an-escrow-waiver-fee-worth-it.html#comment-2675 Clare - I don't know if it's a Freddie Mac rule or not. If the fee is too high, just decline the escrow waiver and do the escrow. You will have to pay the property taxes and hazard insurance anyway. It's just a matter of paying them every month versus paying them a few times a year. I cannot justify paying someone a hefty fee just to waive escrow. Clare – I don’t know if it’s a Freddie Mac rule or not. If the fee is too high, just decline the escrow waiver and do the escrow. You will have to pay the property taxes and hazard insurance anyway. It’s just a matter of paying them every month versus paying them a few times a year. I cannot justify paying someone a hefty fee just to waive escrow.

]]> By: Clare McCright http://thefinancebuff.com/is-an-escrow-waiver-fee-worth-it.html#comment-2673 Clare McCright Fri, 11 Sep 2009 03:29:25 +0000 http://thefinancebuff.com/2009/05/is-an-escrow-waiver-fee-worth-it.html#comment-2673 Property taxes and home/hazard insurance are higher in my state. I was told that it was a Freddie Mac rule that I must pay a .5% "fee" for the escrow waiver. That's significantly higher than you indicated. Have I been misled? Property taxes and home/hazard insurance are higher in my state. I was told that it was a Freddie Mac rule that I must pay a .5% “fee” for the escrow waiver. That’s significantly higher than you indicated. Have I been misled?

]]> By: TFB http://thefinancebuff.com/is-an-escrow-waiver-fee-worth-it.html#comment-2031 TFB Thu, 14 May 2009 04:43:42 +0000 http://thefinancebuff.com/2009/05/is-an-escrow-waiver-fee-worth-it.html#comment-2031 Marcia - Thanks for the caveat. Unfortunately I'm not able to deduct property tax no matter in which year it's paid. It's still a good point for others though. Marcia – Thanks for the caveat. Unfortunately I’m not able to deduct property tax no matter in which year it’s paid. It’s still a good point for others though.

]]> By: Marcia http://thefinancebuff.com/is-an-escrow-waiver-fee-worth-it.html#comment-2028 Marcia Wed, 13 May 2009 20:42:17 +0000 http://thefinancebuff.com/2009/05/is-an-escrow-waiver-fee-worth-it.html#comment-2028 If you decide not to waive the escrow, be sure to ask WHEN they pay the property taxes. Where I live, we have until January 31 to pay without penalty but if they are not paid by Dec. 31 you have to wait until the following year to deduct them from your taxes. My lender did not pay the taxes before Dec. 31 so I missed out on my deduction the first year. If a buyer is counting on that deduction in the first year of purchase, he/she would be wise to establish when the lender will make the payment before agreeing to the escrow account (or plan accordingly). If you decide not to waive the escrow, be sure to ask WHEN they pay the property taxes. Where I live, we have until January 31 to pay without penalty but if they are not paid by Dec. 31 you have to wait until the following year to deduct them from your taxes. My lender did not pay the taxes before Dec. 31 so I missed out on my deduction the first year. If a buyer is counting on that deduction in the first year of purchase, he/she would be wise to establish when the lender will make the payment before agreeing to the escrow account (or plan accordingly).

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