Taxes and Insurance impounded???

Question

I have never had a loan w/ my taxes and insurance impounded. but the mortgage broker I am now dealing w/ suggest I do it stating it will make my interest rate lower. This sounds like a load of S#! to me I dunno. Should I find a different Broker or is this true. I always try to make some interest on that money through mutual funds instead of giving it up @ the end of every month.

Thanks

Answer 1

the broker is correct.  The bank wants to escrow the taxes and the insurance to make sure they are paid, especially in this market.

Answer 2

I prefer impounded taxes and insurance, just because I'm not a savor.

Lower interest rate for impounding?  That sounds good to me.  You can always call the bank a couple of months after you close and try and "un-impound" the account.  As long as they don't try and modify your note / interest rate back up, you'll be where you want to be.  Lower interest rate, and no impounds.

Answer 3

It is a good idea - very convenient, too.

Answer 4

He is correct, but that's a guideline from the bank he is brokering your loan through. Not all banks offer a lower rate for impounds, if you are worried about him being shady and BS'ing you find out what the origination fees are and if he is getting a rebate on your interest rate. I brokered loans for 4 years, just FYI.

You should do the following when shopping for a loan.

1. Never take the first offer

2. Get a good faith estimate from 2 or more brokers or direct banks

3. Read up on bankrate.com because you can see what rates you qualify for.

4. Make sure you know WHAT loan product you are getting and WHY that benefits you. Certain loan types offer incentive to the Loan Officer not the borrower.

5.  Do not be afraid to be assertive and negotiate. The hagglers always get the best deals.