VTGreg

So with rates where they are I am looking at possibly refinancing. We have only been in our current 30 year fixed loan for a year at a rate of 6.125%. It's looking like the break even point with the current rates is 2.5 to 3 years.

My question is about escrow. If we refinance with another lender, do we lose that money in escrow or is refunded or rolled into the escrow for the new loan?

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cheapie

i'm fairly sure you will not lose the money in escrow.

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ramazank2

You will likely get a refund check. You will also have to prepay to your new escrow.

Chgoman

If you want impound accounts again, you'll have to fully fund them through the refi escrow and then within a few weeks you'll get a refund check from your old loan company.

VTGreg

Thanks all. That's what I figured but I couldn't find any information online to answer my question.

MrGreg

Yeah, the money in escrow is your money. I think you could call them at any point and say "I'll pay the taxes myself, please send me back the money in escrow" and they have to return it to you.

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VTGreg

I'm not 100% sure you can do that. During the load process I questioned using escrow versus paying taxes and insurance ourselves. I was told that the loan structure included escrow and that my rate would change if escrow was not used. That may have been a canned response but I never looked any further into it.

Maarchk

It makes sense that they protect you from yourselves and they protect themselves from you forgetting taxes and the government cutting in line and taking the house before they can do something about it.
But it is your money and you should get it back for re-fi. I would see it as understandable if they raised rates because you are adding risk by paying taxes yourself when they probably have a good system about it.
Althought Fidelity, a company my friends worked out had serious issues sometimes and would forget or misplace funds and not pay all the taxes on time to some counties and houses would be going up for auction by the time they got things straightened out... no good!

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Markel

Some lenders will require you to have an amount (perhaps equal to a year's taxes) in a savings account as a condition of opting out of the tax escrow.

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Jah Rulez

I recently switched homeowners insurance and when I cancelled the one they refunded the check (mortage company pays in full). I asked if I had to send they money back and they said no.

Then they paid the full premium of the new insurance. Saved $300 by the way.

But the loan docs stipulate how the insurance and taxes are paid. If you refi with a new company they cut you a check and I believe the initial escrow (tax and ins.) is accounted for in closing costs.