One of the objections that I get occasionally by Borrowers is that they do not want to escrow for Taxes and Insurance. The major reason that I get from Borrowers who do not want to escrow for Taxes and Insurance, is that they would rather put the money in the Bank and earn interest. At first glance this seems like a reasonable objection, but in reality it is not.
The current prevailing Savings Rate as defined by The Banking Department is .16% while Lenders are required by Public Act 11-94 to pay a minimum of 1.5% interest on funds being held in escrow accounts. That means that Lenders are mandated to pay an interest on escrow accounts that is ten times higher than the prevailing Savings Rate set by the Banking Department.
What this amounts to is that Borrowers who elect to not escrow for taxes and insurance are in reality costing themselves money. They are also subjecting themselves to large tax payment every six months (162 out of 169 towns in Connecticut collect taxes every six months), as well as a large Homeowners Insurance premium every year. I don’t know about you, but that sounds like a losing combination to me, while escrowing for taxes and insurance sounds like a win win to me.
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Who To Call For Your Mortgage Needs In Connecticut:
George Souto NMLS# 65149 is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308 gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.
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