I’m interested in paying my own property taxes if I can afford a home. I understand that not having an escrow account can lead to higher interest rates, but how much more do lenders typically charge? Also, how likely is it for a first-time homebuyer to get an escrow exception approved? Thanks in advance!
Not having an escrow account can lead to a higher interest rate, often around 0.125% to 0.25% higher, depending on the lender. This can add up over the life of the loan.
Lenders prefer escrow because it helps ensure that property taxes and insurance are paid on time. Getting an exception as a first-time buyer can depend on your financial history and the lender’s policies, but it’s definitely possible.
Keep in mind that some lenders may require an escrow account as a condition of the loan, especially for first-time buyers. It’s worth discussing upfront with your lender.