Mortgages, condos, insurance - escrow question

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dm200
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Mortgages, condos, insurance - escrow question

Post by dm200 »

I am trying to assist a friend/acquaintance unravel her financial challenges. Getting all the relevant details is much like "pulling teeth".

She purchased a condo about 20 years ago and, over time, the "value" has increased to about 4 times what she originally paid. HOWEVER, she has pulled money out several times and now has a first mortgage and equity loan about 3 1/2 times what she paid 20 years ago. With fees, condo assessments and the loans, she would be luck to break even if she sold it. The condo meets her needs and is best off by staying. Needless to say, her monthly mortgage payments are relatively high.

From the numbers and figures she give me and I see, it looks like the mortgage lender only escrows for the real estate tax - and not for insurance or condo fees. That seems separate. Is that "normal" for lenders on condos?

She thinks borrowing more to get caught up on the monthly mortgage, home equity and condo fees is the answer to her problems. I disagree and think she should just be a tad late for now and be a little less late every month into the future until she gets caught up. From what I see, doing this would not put her more than one month behind on the three big expenses she has - so my guess is that there will not be much harm (net) to her and might better grab her attention to paying the bills.

Ideas? The "good news is that she does not have any current credit card balances or payments.
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CAsage
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Re: Mortgages, condos, insurance - escrow question

Post by CAsage »

Consider checking whether home equity loans are still deductible interest (maybe not?). If so, refinancing the home equity and the first mortgage into one first mortgage .... well, with the loan/value ratio, that might be tough. I don't think they escrow condo fees because they change so much. Sounds like the real problem is budget! If those don't charge interest, I would pay that last.... You cannot borrow your way to solvency. What is the condo insured for? I thought the condo association would insure the building, and you don't need to pay to insure contents (as in, optional).
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
delamer
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Re: Mortgages, condos, insurance - escrow question

Post by delamer »

Based on my spouse’s and my experience, HOA fees are not escrowed.

Has the HOA attached the property due to late fees?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Not Law
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Re: Mortgages, condos, insurance - escrow question

Post by Not Law »

She is using the equity in her home as a means to live BEYOND her means. Unless you can convince her to live BELOW her means, your efforts will be futile.
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dm200
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Re: Mortgages, condos, insurance - escrow question

Post by dm200 »

delamer wrote: Sun Jan 07, 2018 3:22 pm Based on my spouse’s and my experience, HOA fees are not escrowed.
Has the HOA attached the property due to late fees?
1. Thanks for the feedback. I also assume that the equivalent of the mortgage required Homeowners insurance is part of the condo fee.

2. No, she is not yet past due to trigger such action, nor will she be (as best I can determine)
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dm200
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Re: Mortgages, condos, insurance - escrow question

Post by dm200 »

Not Law wrote: Sun Jan 07, 2018 3:24 pm She is using the equity in her home as a means to live BEYOND her means. Unless you can convince her to live BELOW her means, your efforts will be futile.
Yes, you are correct, in my opinion. A relatively big chink of the cash out on the condo several years ago was to assist a close family member in a distant state; she is at risk of "drowning" now because she helped the relative.
BuffaloBill21
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Re: Mortgages, condos, insurance - escrow question

Post by BuffaloBill21 »

dm200 wrote: Sun Jan 07, 2018 3:12 pm I am trying to assist a friend/acquaintance unravel her financial challenges. Getting all the relevant details is much like "pulling teeth".

She purchased a condo about 20 years ago and, over time, the "value" has increased to about 4 times what she originally paid. HOWEVER, she has pulled money out several times and now has a first mortgage and equity loan about 3 1/2 times what she paid 20 years ago. With fees, condo assessments and the loans, she would be luck to break even if she sold it. The condo meets her needs and is best off by staying. Needless to say, her monthly mortgage payments are relatively high.

From the numbers and figures she give me and I see, it looks like the mortgage lender only escrows for the real estate tax - and not for insurance or condo fees. That seems separate. Is that "normal" for lenders on condos?

She thinks borrowing more to get caught up on the monthly mortgage, home equity and condo fees is the answer to her problems. I disagree and think she should just be a tad late for now and be a little less late every month into the future until she gets caught up. From what I see, doing this would not put her more than one month behind on the three big expenses she has - so my guess is that there will not be much harm (net) to her and might better grab her attention to paying the bills.

Ideas? The "good news is that she does not have any current credit card balances or payments.


Yes that’s normal. Some lenders require escrow for insurance but that will vary depending upon the master policy.

You say “get caught up” how far behind is she?
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dm200
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Re: Mortgages, condos, insurance - escrow question

Post by dm200 »

You say “get caught up” how far behind is she?
Seems to be about one month or so.

My thoughts are that being late (even with some fees) puts more "incentive" for her to keep expenses under control, instead of getting a $2,000 (or so) 12-24 month loan and think all is OK>
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