Did You Know?

Did You Know that most lenders will allow you to pay your real estate taxes and homeowner’s insurance either through your mortgage payments or on your own?

Mortgage lenders typically default to having you pay your real estate taxes and homeowner’s insurance as part of your monthly mortgage payment. (Each month’s mortgage payment would include a bit of the principal you borrowed, interest on the balance, 1/12 of your annual real estate taxes, and 1/12 of your annual homeowner’s insurance.) However, you often have the option to NOT include your real estate taxes and homeowner’s insurance! You can choose to pay those on your own!

Many borrowers find they cannot budget for large expenses. They want to keep their monthly expenses consistent throughout the year. However, for other borrowers, their cashflow warrants them keeping their monthly mortgage payments as low as possible (they wish to pay only principal and interest). As for taxes and insurance, based upon bonuses or similar large amounts of income received, they feel they can budget to pay the real estate taxes and homeowner’s insurance once per year.

As a mortgage borrower, if you feel that one option works better for you than another, let your loan officer know! It’s likely you can have the mortgage payments structured as you wish.

HOWEVER, beware of the “slick and sleezy” mortgage loan officer who claims they can save you many thousands of dollars in closing costs! I’ve seen too many instances where a borrower was lulled into thinking they were saving thousands of dollars at closing, only to find out their closing costs were exactly the same as every other lender, however, the loan officer waived the escrow account without telling the borrower, so that the closing costs would appear to be lower.

Yes, there are still dirty tricks being played out there. It’s yet one more reason why every borrower should work with a competent, qualified, and highly recommended mortgage company and loan officer.

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Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, The Daily News, Anton Press, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.