Just wondering if there are any disadvantages to remove my taxes & insurance from my escrow?
Main reason I ask is that I have one property paid off, so I pay my T&I myself, and another one with a mortgage. My insurance agent is telling me that since one property has an escrow and the other doesn't, that I would have to get two separate insurance policy. I think I would rather just pay the T&I myself, but wanted to ask you all what you thought about it?
My mortgage servicer is BofA, hopefully they don't make it hard for me to remove my T&I from escrow.
Plus I get points paying my insurance with my credit card :)
I'm not sure I follow what your insurance agent said. Wouldn't your insurance policies be on a per house basis anyway?
As far as T&I, we escrowed them on our residence when we bought new a few years ago. I got them removed from escrow because I got tired of having to jack around my monthly payments to make up for overages/shortfalls. It cost me $500 to do so with my mortgage provider.
I am applying for a mortgage right now. The first proposal from the lender was to escrow T&I, but I have a commercial insurance policy with multiple properties. I asked the lender if they could remove the requirement and they said it would cost .25 points, but when I explained the commercial policy, they dropped the escrow requirement with no additional cost to me. I don't think there are any disadvantages to getting the escrow removed, just make sure you make the payments yourself.
A commercial insurance policy is cheaper than having a few landlord polices. They will not let you split out part of a commercial policy is being paid under a escrow account.
Yes, I think mine is a commercial policy. It's called a Business Owners Policy from AmFam. Same thing? It's kinda like an umbrella policy in that I have 2 Million that covers all of my properties and not $500K on each like some investors do.
I spoke with my insurance agent and she told me that she would just bill the mortgager when the insurance payment is due. I put on my calendar as a reminder as well.
One thing I did learn that if you have a mortgage and pay your T&I separately, your mortgager may require you to show proof of insurance every year and if for some reason you miss it or they don't get it, they will automatically buy you the default insurance, which of course cost much more.
It sounds like your insurance bill for both will now go to the one mortgage company. That mortgage company will see that larger bill, and increase the escrow impound amount when they do the next annual analysis. When they get to that first analysis after the change, they will have already paid that extra money (it's like a free loan to you, believe it or not). So they will send you a shortage notice with the analysis, allowing you to pay the shortage amount. You might want to do that the first time, since they will otherwise amortize the shortage over the next twelve months thus making the mortgage payment higher (each month will end up with 2 times the insurance for your paid off property if you don't pay that shortage).