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I just got off the phone with Wells Fargo to try to close my escrow account on my mortgage (prefer to just manage taxes & insurance myself).

I'm currently at an LTV of 75%, and after doing some quick research it seems like 80% is pretty much the standard for allowing removal of escrow. I was surprised when Wells Fargo told me 65% was necessary.

Even quoting their FAQ page about escrow accounts

Most of the time, escrow accounts are required if your down payment was less than 20%.

seems to imply an LTV of 80% would warrant closing an escrow account if desired.

Does this seem highly unusual, or would this be considered a fairly typical ratio?

  • I am quite sure that they are required to agree if you are below 75% (but I have no source handy so no answer). Of of course, they are anything but eager for that so they might just BSing you. Consider threatening to refinance to some other bank. – Aganju Nov 21 '18 at 20:16
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    @Dilip Sarwate, this is not a duplicate. The linked 'duplicate' is regarding PMI. PMI is different from an escrow account. – Adam Johns Nov 22 '18 at 1:05
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    @AdamJohns You are right. I have voted to re-open the question and it has been re-opened. – Dilip Sarwate Nov 22 '18 at 14:21
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    why would you want to handle taxes and insurance yourself ? I'm fairly sure my bank handles all that for free – xyious Nov 22 '18 at 17:29
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    @xyious, mainly because I don't like the layer of abstraction. I'd prefer to interact directly with the people I'm paying. Also if your taxes increase, not only will you be required to pay a higher amount every month but you'll also be required to pay a catch-up amount to make sure you're funded. They'll eventually wind up wanting 1-2 months of buffer ($1k or more) just in case. – Adam Johns Nov 22 '18 at 18:11
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I got Wells Fargo to mail me a document outlining all the requirements for closing my escrow account.

It turns out whoever I was speaking with on the phone was just wrong. The document stated as long as the house is my primary residence (it is), I only need to have an LTV ratio of 80% to close the escrow account.

I called back and requested closing the escrow account, and didn't have any trouble.

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