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Question for the Money Doctors

Question submitted on Jan 4, 2014.

Question

We owe about 45,000 on our house and are trying this yr (as our payment has now gone up 200) to pay our home insurance and taxes on our own and discontinue our escrow account with Wells Fargo. They are disputing our doing this saying it is because our credit rating is below 680 which it is not. Can they do this?

Answer

This is based upon the terms and conditions as set forth in your promissory note. Banks like to escrow the property taxes and insurance because they are annual payments and by collecting a little each month, this will ensure these amounts are paid. To keep your mortgage, the property taxes must be current and house has to be insured. I would stick with the escrow because you don''t need to worry about a big bill when it comes due. Spreading out the payments over the course of a year without any cost is a pretty good deal.

Please talk to Wells Fargo to see if it makes sense to refinance your mortgage since interest rates are still low. It sounds like you have an adjustable mortgage. A fixed mortgage will give you the security of not having increased payments in the future. It should be quicker and easier to refinance with your existing lender.

Please ask Wells Fargo for a copy of your latest credit report to see if it has correct information. If there are errors, you can correct them with the appropriate documentation.


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