eh I'm ok with that. I'd probably blow through the extra $200 each month because I'm dumb like that. And it's all worth it when the bill comes in the mail and I go "man, glad I'm not writing that check right now" Sure I've paid that money, but $3000 in 12 monthly installments is better than $3000 in two big chunks.

 

Everyone i've done a loan for on a loan program that strongly suggests impounds has was always glad they listened to me.

And if the loan program you’re about to get in does penalize if you chose not to do impounds at the cost of a higher rate, then I say do them anyways!

Also, if my clients are set on paying them out of pocket then I encourage them to pull out their impound account after I do their loan so I can get them that slightly better rate having established an impound account from the start.

 

I bought back in April of this year. It's the Supplimental Assesments that suck. I'll pay my 1% but, the rest of the taxes are getting out of control. I don't do impound accounts. I just set up a separate savings account and transfer money there every month to cover the cost. I just hate to see that much cash go out and not have anything to show for it.

As was said, I'm looking forward to my refund next year. My loan was structured so that the majority of the costs were covered by the loan officer and rolled into origination fees so I can deduct them. Hopefully I'll have a pretty healthy refund coming back to me.

Bill

 

That's works as well so long as you're disciplined enough for it.

If you ever refinance into a program that allows for a better rate with an impound account go ahead and do the impound account only to get out of it after a couple months. It’s your money anyway so they’ll give it right back to you.

 

My impound account pays me interest, which goes back into my impound account (they also do an adjustment annually based on how your insurance/tax changes) and the rate is alot better than my savings. I think last year it worked out to be around 4% interest for me.

 

Hmm, interesting. My broker didn't gave me an option for an impound account when going over the loan paperwork. I basically said I didn't want one as part of the deal (figuring I could set aside the money myself and invest it properly), and he said he didn't believe in them either for that same reason.

My rate was fairly competitive, definitely not 0.25% higher than the other rates I found at the time (unless those were based on a non-impound account based loan.) So assuming I didn't get an increased rate, what's a typical fee amount that gets assessed when going the non-impound account route?

 

Something like 1 point?

 

It doesn't have to be a fee at all, especially if the Broker is nice, has a strong business relationship with you, or is already making a sufficient amount of money on the deal.

Questionable brokers typically offer rates that give them a rebate from the bank for selling a loan to a client. They get this rebate directly from the wholesale lender as a way to say thanks for getting them the 15yr+ loan. It’s the least they can do as they’ll be making a killing off interest so long as the loan is not paid off. A lot of loan programs come with a .125 or even .250/.500 cost to the rebate if you do not take impounds, some do not.

So if the rebate for a 6.125% loan was (1.0) negative points to the broker on a 400,000 loan amount, then that's a $4,000 yield going into the broker's pocket at close. So because you didn't want the impound account on a loan program that encourages setting up one, the rebate is now at (.750) negative points to the broker at $3000.

So now three things can happen to you: 1) The broker can be satisfied with the amount of money he's making on (.750) negative points as it's still a considerable chunk of change coming from the $400,000 loan amount ($3000).

2) He can look on his rate sheet to see what would get him (1.0) negative points after a .250 hit for not establishing an impound account. So now he looks on his rate sheet and notices 6.375% has a negative rebate of (1.250).... then add in the .250 hit for not establishing impounds and he's got you convinced to take the higher rate while he still makes the money he thought he would on (1.0) negative points.

3) Lastly, he can keep the original rate he quoted with (.750) negative points after the hit and charge you .250 origination or WAY more to get back the money he originally expected he'd be making.

So why do I say take the loan with impounds only to pull the impound account later if you really want to? Because you really do not know what the broker is doing at all times. He could have sold you a higher rate like he did in scenario #2. That lower rate could have actually been in your grasp had you went with the impound account. How do you really know?

Don't give them the chance to charge you or convince you of a higher rate just so they can make-up the petty amount of money they lost by not convincing you to set-up the impound account.

Instead, help him help you by getting the sweet rate with impounds. Then after a couple months pull the impound account if you really want to... you'll still be walking away with the nice rate. You could even tell your broker you want to this should it even apply in the first place.

 

But if you pull out of the impound don't you get a penalty? I always thought that if you set an impound you are stuck with it?


Nick

 

Depends on the guidelines within the program and that needs to be something you need to talk to your broker about.

But most of the time there isn't a penalty as it's your money after all. But it usually takes a few months before you can access it from the time the deal closes.

 

i usually sell some of my company shares for the first installment of the property tax and use the tax return for the 2nd installment.

I do my taxes late Feb to early March.. that way I get my tax return by the time most people are getting they ITF.

But you gotta love it though... lowering your tax bracket... i drop my tax bracket from 40% to 10% because of the interest that i pay and itemizing... haahah... ****ing IRS...
what's funny is that I set my W4 exemptions to 6 and i still get money back...beauty of itemizing