How to Remove an Escrow Account
When you buy a home, the escrow account is used to hold your earnest money and down payment is safe keeping while inspections are done and the process of buying the home proceeds. When the home sale is closed, many escrow accounts remain, holding pre-paid property taxes and mortgage insurance premiums. You must continue to make payments that include these values, effectively losing the use of the pre-paid funds until some point in the future. That future point is when the escrow account is removed.
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Instructions
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Own the house for at least six months and continue to use it as a primary residence. Investment properties and rentals do not qualify for escrow removal.
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Maintain a positive payment history with no delinquent or late payments. Your escrow balance should be positive as well, which isn't a problem if you have made all payments in a timely fashion.
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Get a current fair market value of your home. If the home has appreciated since you bought it, you may have a loan to value ratio less than 80 percent meeting one qualification for escrow removal. Call a realtor or use an online home appraisal website to get the fair market value or have your bank appraise the home.
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Re-finance the home if it was originally financed through an FHA/VA program. These programs require escrow for the duration of the loan.
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Write to your lender with the information supporting the removal of the escrow. Include the appraised value, loan balance and all other information demonstrating that all guidelines are met.
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References
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