We get a question from time to time that goes like this: “Do I have to include escrows with my VA mortgage payment?” This is a very good question because most banks will tell you yes, you have to put the escrows in as part of a loan. These include the interest and taxes associated with your payment.
These payments are standard, but for retired veterans or someone who is buying their final home, they may not want to include those escrow accounts. Technically, the VA says that you do not have to include those with your payment. If you choose that route, you’ll be paying your taxes and insurance completely separate from your normal mortgage payment.
Why does every lender tell you that you have to keep those escrows? Well, if you separate them out and don’t pay your taxes, the only thing that supersedes every other lien is a tax lien. This can lead to a quick foreclosure if things are not handled precisely.
Let’s say you forgot to pay your annual insurance on Tuesday and your house burns down on Wednesday. The lender now has a $400,000 pile of burnt ash and you don’t have any insurance money to use to rebuild.
If you do want to separate out your escrows from your payment, don’t hesitate to reach out and give us a call or send us an email if you need assistance. We’d be happy to help and answer any questions you may have.