A few mortgage questions

[Deleted]

I never go to the RE board and it seems dead, but if this thread belongs there and kaylie/MrsJ you want it there instead, feel free to move it. 

We're refinancing with USAA. I have a couple of questions about the new mortgage since it's different from our old mortgage (only one we've ever had), and we won't have a processor for another 5-10 business days.

(1) We now have to escrow taxes and insurance. It seems like I've read some horror stories about that here before, but I wasn't really paying attention. Anything I should be particularly careful about tracking? How do they predict what my the taxes and insurance will be? Do you get charged the same amount for an entire year, then at some point they adjust the amount to predict the next insurance/tax payment? Or if things go up, do you just have to put more in at the end of the year or something?

(2) We now have to pay PMI since our value has dropped so much. Once we're down to 80% LTV again, what's the process for having PMI removed? Is it different for every lender?

(3) USAA in general--I love them for insurance; anyone have a mortgage there and have problems? We're coming from Citi, but we've never had any problems with Citi.

[stephm0188]

What kind of loan is it?

[Deleted]

Just a regular, fixed-rate, 30-year, conforming (below $417K) mortgage. Nothing fancy. Does that answer the question? I know practically nothing about mortgages, so I'm not sure what you're asking.

[stephm0188]

FHA changed the terms for PMI, and refinancing a VA loan is a little different than others.

We've always escrowed insurance and taxes, and its NBD. If escrow is short, they will notify us that we need to pay more, but it's only happened once after a tax levy. We recently refi'd with USAA and had to fund taxes and insurance, but we received the funds from our escrow account back from the previous account.

No experience with PMI, we've never had it.

Never had a problem with USAA. They tend to originate the mortgages, but not hang on to them. Our loans have always been sold off to another company, PHH.

[downtoearth]

Getting PMI is not as easy as it seems. You have to have >20% (or similar it depends on the loan) in equity in the house AND have been paying the interest for 5+ years. Or something like that. I would have to look up the exact info, but if you are close to 20% and could get there in less than 5 years, don't count on that going away until that 5 year mark, I think.

[Deleted]

Not even close to 80. We're having to bring almost the equivalent of another downpayment just to get to 95%. After having put down 20% to start and paying for 6 years. FML. Oh well, even with PMI we're saving huge amounts of money so I can't complain to much. If home prices continue trending upward we'll hit 80 sooner rather than later, but if there's a time limit, that doesn't really help. Do you have to pay for another appraisal to prove you're at 80?

[SusanBAnthony]

I don't know about your lender, but we just closed with Wells Fargo. We can get rid of the pmi at two years if the loan is paid down to 80% of the original purchase price wi no appraisal. This would require us making extra payments.

The other option is that we can pay for an appraisal at any time, and if it has risen in value and/or been paid down enough, we can have the pmi removed.

The appraisal when we bought was 20k higher than the purchase price, so our plan is to appraise in two years and hope that a combo of paying down the loan a little through the regular payments, the initial equity we had, and an improvement in the housing market will add up to 20%. I will check comps carefully myself before we pay for it though. It is a neighborhood of very similar houses all built at the same time, so it is pretty easy for me to east image what it will appraise for.

[SusanBAnthony]

Also, again with Wells Fargo, our old mortgage in Mn, which we held for 7 years, never had a problem with escrow. If occasionally adjusted upward or downward, but we are talking 25$ or so, and it was not more often than once a year. Way easier than having to worry about paying the tax and hoi myself, IMO.

[Deleted]

Thanks SBA. Sounds like it might be bank-specific? I'll have to ask the processor that one.

[moolarkey]

To figure out your taxes they will go to your county auditor (or whichever government body in your state) and find out what the taxes actually are on your property. They'll divide it in to 12 and add it to your monthly payments.

[ktzmoh]

we have our insurance escrowed and it's not been a big deal this first year. The PMI think i think is bank specific - check with them about the process. I recall that ours can be removed after 2 years if we are at 80%, but we need to request it. It goes away automatically when we hit 78% - some threshold slightly below 80%. I can't remember exactly.

[pamela]

The only problem I've had with our USAA mortgage was they paid the insurance on the due date, so we'd get dire warnings from the insurance company leading up to the due date because our due date was at the beginning of storm season so if they were a day late, we would have lost our coverage. Otherwise, no problems with the escrow.

[Deleted]

Thanks Pamela. Our insurance is also through USAA, so perhaps they will be better at coordinating? But if they sell the loan, I don't know what will happen; I'll definitely keep my eye on due dates to make sure they are made on time. I'd much prefer to do this myself, but it would cost us on the interest rate to do so.

[Deleted]

Oh, oh, one more question: Does the tax bill go to the escrow company directly or do I have to forward it? And how do I get the record of payment for tax deduction purposes? Does the escrow company provide a statement at the end of the year?

[kaylie]

Is it a conventional loan or FHA? If it's conventional, you can ask them to drop your PMI once you hit 80% LTV and they might, but they are required by law to drop it when you hit 78%.

For our escrow, they recalculate it every October and let us know what our new payment is. I keep track of it in my head - if our insurance goes up I figure the increase divided by 12 will be the amount our payment goes up.

On the tax bill, most municipalities will allow the lender to pay the taxes without the bill. Mine does not, so when the bill comes I mail it in and they pay it. At the end of the year the real estate taxes paid shows up on the same form that the mortgage interest does.

[pamela]

May 10, 2013 18:48:49 GMT -5 @juno said:

Thanks Pamela. Our insurance is also through USAA, so perhaps they will be better at coordinating? But if they sell the loan, I don't know what will happen; I'll definitely keep my eye on due dates to make sure they are made on time. I'd much prefer to do this myself, but it would cost us on the interest rate to do so.

Nope, that didn't help.  It was never late, just bugged the heck out of me because I would personally have sent it in way in advance.  Just try not to close and have your policy start right at the beginning of hurricane season if applicable.

Escrow paid the tax directly.  We always received a copy of the tax bill as well and it has a statement on there to forward it to your mortgage company, but they always get a copy directly as well.  Yes, you get a tax statement at the end of the year stating interest and taxes paid.

If taxes or insurance change your escrow payment will be adjusted annually, so that could be up or down.  You do usually have the option to just make a lump payment to correct it or have your payment adjusted.  And if you account is over the minimum buffer needed, you'll get the option to either keep it there, have a check cut or put it on your mortgage.  We always have ours added to our mortgage since we'd already budgeted that money as gone anyway.

[Deleted]

May 10, 2013 18:51:07 GMT -5 @juno said:

Oh, oh, one more question: Does the tax bill go to the escrow company directly or do I have to forward it? And how do I get the record of payment for tax deduction purposes? Does the escrow company provide a statement at the end of the year?

The regular tax bill will go to the escrow company and you will also receive a copy.  You just keep the copy for your records and the escrow company will do the rest.  Sometimes escrow companies will estimate too low and you will get a notice that either a) you just pay the shortage and your mortgage will only increase slightly to cover the increase in taxes/insurance that they didn't estimate correctly or b) you can include 1/12 of the shortage amount each month along with you newly increased mortgage amount and pay and even higher monthly mortgage payment.

In theory, the company should have the proper info because you have already been paying these amounts but sometimes they just get it wrong.  No real rhyme or reason to it.  I would look at your most recent propery tax bill and homeowners insurance bill and find out what a monthly payment would be on these.  If this matches with your escrow amount then you are fine.  If your escrow amount is short you can at least be aware of an impending shortage.

[Deleted]

Our taxes change almost every year, so I don't think they can just go off the previous year. Sounds like we'll just settle up at the end of the year. Thanks for all the info everybody!

[awick14]

@juno, I'm not sure if escrow there is the same as it is for us, in Canada, but we can request to have extra money taken out just in case. We increased our payments each month by 5% last year as taxes usually go up 2-3% a year in the city where we live and we didn't want to be caught off guard by an extra payment in June/July.

Taxes are going up 2.5% this year and we will take the extra money and use it as a extra payment onto our mortgage.