Minnesota mortgage rates have moved up slightly over the past two weeks. Below is a day by day history of 30 year fixed Minnesota mortgage rates for the week ending Friday, April 25th.
Monday = 6.00% apr = 6.15%
Tuesday, = 6.00% apr = 6.15%
Wednesday = 6.00% apr = 6.15%
Thursday = 6.125% apr = 6.275%
Friday = 6.125% apr = 6.275%
These Minnesota mortgage rates are brought to you by Metropolitan Financial Mortgage Company, a Minnesota mortgage broker in Richfield.
For a current Minnesota mortgage rate quote, call Ken Horst at 612-251-8237
To see all the mls listings in Minnesota and in 230 other cities in the US, visit www.mlsmaps.com
Saturday, April 26, 2008
Sunday, April 20, 2008
Should I Escrow for Taxes and Insurance?
I received a call recently from a past client who was asking about her escrow for tax and insurance. She had been talking with a friend who suggested to her that she try to close the escrow account and pay her property taxes and hazard insurance separately on their own. Her friends biggest reason for this was her belief that the lender is earning interest on your money, instead of you. Here are a few of the reasons why I suggested that she was better off escrowing taxes and insurance;
1. Most lenders will charge a slightly (.125 - .25%) higher interest rate if you do not escrow. Some lenders will allow you to wave this if you have a large enough down payment, at least 20% down.
2. Your money earns interest in your escrow account for you not the lender. Granted it is not a lot of interest, but it is interest earnings in the right direction.
3. You'll never have to worry about some unexpected expense, medical, major auto, etc., wiping out your tax and insurance reserves and causing a delinquent property tax situation.
One of the big arguments against escrowing is that people feel they can invest those dollars and earn a higher rate of return than the lender. Unless you are a seasoned investor, this rarely plays out and the higher the interest rate you are trying to earn with your money, the greater the risk. In addition to that fact, we are not talking about a lot of money to invest for most of us as your escrow balance is capped at only 3 months worth of property taxes and 3 months worth of interest. Your taxes are paid every 6 months, which generally isn't enough time to make a killing in the stock market and your property insurance is paid every year but is usually under $1000, depending upon where you live and the replacement cost of your home, not a lot of money for your stock broker to play with.
So the bottom line is this, I recommend escrowing for most of my clients and I have always escrowed my own taxes and insurance. At a three month reserve cap, we are generally not talking about a lot of money and the amount of time you will need to manage that money and try to earn a better rate of return may not be worth the return, especially if your investment idea tanks and you end up losing your reserves in the market.
1. Most lenders will charge a slightly (.125 - .25%) higher interest rate if you do not escrow. Some lenders will allow you to wave this if you have a large enough down payment, at least 20% down.
2. Your money earns interest in your escrow account for you not the lender. Granted it is not a lot of interest, but it is interest earnings in the right direction.
3. You'll never have to worry about some unexpected expense, medical, major auto, etc., wiping out your tax and insurance reserves and causing a delinquent property tax situation.
One of the big arguments against escrowing is that people feel they can invest those dollars and earn a higher rate of return than the lender. Unless you are a seasoned investor, this rarely plays out and the higher the interest rate you are trying to earn with your money, the greater the risk. In addition to that fact, we are not talking about a lot of money to invest for most of us as your escrow balance is capped at only 3 months worth of property taxes and 3 months worth of interest. Your taxes are paid every 6 months, which generally isn't enough time to make a killing in the stock market and your property insurance is paid every year but is usually under $1000, depending upon where you live and the replacement cost of your home, not a lot of money for your stock broker to play with.
So the bottom line is this, I recommend escrowing for most of my clients and I have always escrowed my own taxes and insurance. At a three month reserve cap, we are generally not talking about a lot of money and the amount of time you will need to manage that money and try to earn a better rate of return may not be worth the return, especially if your investment idea tanks and you end up losing your reserves in the market.
Subscribe to:
Posts (Atom)