thanks for your time
Tru Value Realty
It is much safer for anyone to escrow insurance and taxes therefore when you have tax bill due at end of year for $x,xxx you are not "stuck with tax lien on your property"
Happy to assist you with our home search
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
In evaluating the borrower's ability to pay, they look at your history of paying on your various accounts to see if you seem to take your loans seriously. They look at your income to make sure you earn enough money and are expected to remain employed for the foreseeable future.
As a rule, the evaluation takes the amount of income and compares that to your current debts plus the amount for the proposed loan to get the house, and years of lending experience teaches that around 40% of gross income is the maximum that banks will allow you to pay for the old debts plus whatever it costs for your new home.
This includes homeowner's insurance, taxes, mortgage insurance, owner association dues, and the repayment of principal plus interest.
Even if you could find a lender who did not require an escrow account to hold the tax and insurance money for payment when due, they all factor in the cost when evaluating your ability to pay back the loan. While it is true that FHA requires the escrow account for taxes and insurance, most conventional lenders do, too. And, as mentioned, all of them still consider the total housing payment, not just the principal and interest payment on the loan. your total payment is P+I + T + I + MI + HOA, usually referred to in its shortened form PITI.
Why would you not want the taxes and insurance put into escrow?
Keller Williams Realty
It is required that you have an escrow account for paying taxes and hazard insurance. And, as a local Realtor in DFW for the last decade, I highly suggest you go that route anyway. Too many people purchased homes in a loose fashion for too many years - allowable as it was - and lost those homes because they couldn't save along the way to pay for taxes and insurance outside of their mortgage. An FHA loan requires some down-payment by you, some pre-paid closing expenses, and an escrow account. It's a great loan program. Buy less house and be happy that you are buying in DFW where you can get more house for your money than you can in many other regions of the United States.
Have a blessed day!
Also note that just because you can qualify for a loan amount does not mean that is how much you should spend that much. As a Realtor and a Mortgage Broker I constantly speak with people who are "house poor". If you could afford more house not including the tax and insurance payments how would you come up with the money each year to pay your taxes? Sure you may be able too but many people have bought too much house without escrows and have then realized at the end of they year they do not have enough to pay the taxes on time. Believe me you do not want to get caught up in that. The penalties for paying your taxes late are awful.
So again to answer your question... even if taxes are not included in your payment each month the lender includes them when they qualify you for a loan.
Good luck on your home purchase.
Others below have answered your question, although I will be more clear. Unless you put down 20%, you will have to escrow. The things that are included in your debt ratio are principal and interest on your loan, property taxes, homeowner's insurance and mortgage insurance, plus any homeowner's association dues if there are any. By not putting them into your payment, it doesn't mean that you can qualify without them. The only thing that is now required, but doesn't go into your payment, is the HO6 policy on a condo.
Has anyone discussed the idea of trying to do a seller's concession with you if you want to use more of your own money for a down payment, or have less to work with?