How to Cancel Escrow
Carrying escrow on your mortgage can be both good and bad. On the upside, you have the convenience of your property tax and insurance payments rolled into your mortgage payment. The downside is that you are responsible for a larger sum at one time. If escrow has become a problem, you can request that your lender cancel it. If your lender will allow it, the cancellation is just a matter of following the required procedure.
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Instructions
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Review your escrow agreement for cancellation provisions. You should have a copy with your closing documents. If you do not have one or can't locate it, contact your lender. You have the right to copies of all documentation related to your closing.
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Ensure that you meet the criteria to cancel escrow. For example, to cancel mortgage insurance escrow on an FHA loan, you must have paid your mortgage down to reflect a minimum loan-to-value of 78 percent. Some lenders may not waive escrow under any circumstances. Better you find out now before you go through a fruitless effort.
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Contact the loan department and ask where to direct escrow cancellation requests. Banks typically have a designated department or individual to facilitate such requests.
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Put your request in writing. Include your name, account number and which specific escrow (e.g., taxes, homeowners, mortgage insurance) you would like canceled. Detail the reasons for your request and that you have met all applicable criteria.
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Complete any paperwork required by the bank. Some lenders may simply cancel the escrow based on the letter. Others may require you to fill out more paperwork.
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