It has been a year since posting this question: Mortgage sold to yet another servicer. What are my options?, and I am happy to report that I have not had any problems with this new servicer. However, following the advice in the answers/comments, I still requested that I pay my own escrow. (I had to wait a year into the loan to build up credit/trust before I was allowed to request the removal.)
However, now they are trying to charge me a fee of $850 to process the request. According to the letter, I must:
Pay a one-time escrow removal fee of $850.00, which represents .25% of your original loan amount, and it covers our costs in monitoring non-escrow loans' tax and/or insurance payments for the term of the loan.
My questions are:
- Is this fee normal/fair?
- Does it make financial sense to follow through? As in, will I make this money back in interest over the span of 29 years?
Regarding the second question, my taxes/insurance is ~$6000 per year, all bills paid semi-annually. According to my simple math (($3000*0.5%)*58 payments) = $870, meaning as long as I make a half a percent in interest on my money, it would be even. Obviously this math does not represent cumulative interest, but I don't believe it should since I will be losing the principal avery 6 months. There would be some accumulation here, but I have neglected it.
I will also have to provide documentation to them after each payment I make to prove I am paying, which might be more of a headache than it's worth, but that's a separate issue.