Question by Tatyanna N: Do I have to use escrow when refinancing my mortgage?
I am refinancing and my loan officer says that I have to pay $ 2000 for using escrow. Is there a way around it? I thought that escrow was unnecessary when refinancing. Isn’t it needed only when purchasing or selling real estate property?
Best answer:
Answer by Ellen J
I’m no expert but it’s my understanding that escrow is the account that the lender draws from when they pay the tax bill and the home insurance bill. If you don’t put money in an escrow account then you’d better be prepared to pay these bills yourself because, if you don’t, you will surely lose your house.
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Yes, you have to go through the escrow process. New trust deeds need to be drawn up and the old ones paid off and released. Other paperwork needs to be taken care of as well — disclosures, appraisals, title insurance, surveys, etc. and these normally require the services of an escrow agent or attorney. You do NOT have to use the lender’s preferred escrow company, however. Shop around and tell the loan officer which agent will be doing the loan closing.
Don’t confuse that with the impound account with the mortgage servicing company, sometimes referred to as escrow in some parts of the country. Two totally different issues. Not all lenders require impound accounts, especially if the borrower has a long and strong credit history. I was able to dispense with the impound account when I refinanced 3 years ago but still had to close the loan through an escrow company.
I’m so tired! I read “scarecrow” instead of “escrow” at first and started laughing. Now that I know it’s escrow, it’s not quite as funny.
sure do. they are the uninterested party handling the money fairly. and they also insure the lender against any ownership law suits. let say you had a cousin who is actually on title, but due to an error he was left off. Now the insurance would protect the bank. Doesnt really help you, but you have to pay for it. 2000 sounds like very fair pricing too
any other fees? they may be too much or just extra