Hi, everyone,

I am a first time home buyer in the process of buying one. The problem is that the bank (lender) combined principal+interest+hazard insurance+property taxes. However, I want to pay property taxes & insurance separately.

The bank (Bank of America) told me I can make the request after 6 months of regular payments. Does anyone know if this is true? Can I do it earlier? I feel like the bank is not being honest.

Any advice would be appreciated.

Thank you.

Our local bank will allow customers to pay their own taxes and insurance themselves if you put 20% of the purchase price as a down payment. Not so easy to do these days.

Hi, gjfix47,

Thank you for your response.

I did put 20% down but the paperworks are already in process.

If I want to separate taxes & insurance, I would have to wait 6 months. During those 6 months, I would have to pay everything combined (principal+interest+hazard insurance+property taxes).

Is 6 months a typical rule/policy?

Thank you,

Uy.

Hello 1st:

Most people don't want to mess with it at all, therefore 30 years is MORE typical. I'd be more concerned whether they're charging you PMI. That's private mortgage insurance which pays the BANK if you default. It's expensive and shouldn't be charged if you put down 20%. I'd make certain that you aren't being charged...

excon

Be thankful they will let you at all. But yes, it is very typical for a mortgage lender to require that you make escrow payments along with your P&I at least initially. You will not have a choice in this matter if you want the loan.

Some lenders will allow you to take over your own escrow after a time. That time will vary by lender and the circumstances of the loan.

The problem with the banks collecting the escrow, is that they use a formula that involves the balance of the escrow account to not fall below 2 months payments. When I was paying my lender the escrow, generally the escrow would go up 2 years, go down in the 3rd year and repeat the cycle. Also, somne lenders do not pay interest on the escrow account.

The problem with you making the payments is you NEED to be discliplined about it. When my bank let me take it over, I setup a separate savings account just for the escrow. I then estimated my payments over the year and calculated a monthly payment. The advantage was I could let the balance fall below 2 months payments as long as I always had enough to cover when the payments are due. But you have to do this calculation on an annual basis (unless you are rich enough to always have the money, in which case I would let the bank handle it for the convenience).