Am I Required To Have An Escrow Account With My Morgage Payment?



Am I required to have an escrow account for my taxes and insurance with my mortgage payment?


That is a decision or a requirement that your lender will make whenever you apply for the loan. The usual case is if you’re getting a conventional loan and the loan - the value - meaning you’re only borrowing 80 percent or less of the value of the appraised value of the property, the lender may agree to let you pay your own taxes and insurance separately.


If however you’re getting an FHA loan or a VA loan or a high percentage loan meaning that you’re borrowing more than 80 percent of the appraised value, the lender is going to require you to escrow for taxes and insurance as well as possibly pay mortgage insurance each month, but that is something that you need to discuss with the lender when you make application for a mortgage as to whether or not the lender will allow you to pay your own taxes and insurance.


There’s another caveat to that is if you have that agreement with the loan originator, if they sell the loan to another servicer or another bank to accept your payments, the mortgage does provide that the successor lender can require you to pay or escrow for taxes and insurance which certainly wouldn’t make you very happy, but you do need to be aware that it is in the mortgage documents that it’s up to the lender to decide whether or not you have to escrow for taxes and insurance.


So, the answer to the question is: it’s up to your lender as whether or not you’ve got to have escrow for taxes and insurance with your mortgage payment.


If you have any questions, well give me a call at 727-847-2288.