Mortgage broker vs direct lender vs bank

An escrow account is held by your mortgage servicer to pay for your property taxes and homeowners insurance on your behalf. You pay a portion of these annual costs with each monthly mortgage payment. The servicer then manages the timely payment of these bills. Your escrow payment is reviewed annually, and your monthly amount may change if your tax or insurance premiums increase or decrease.

While both protect the lender, FHA Mortgage Insurance is required on all FHA loans, regardless of down payment size, and it typically lasts for the entire life of the loan if you put down less than 10%. PMI, on the other hand, is for conventional loans and can be removed once you reach 20-22% equity.

A cash-out refinance makes sense when you have a specific, valuable need for the funds, such as home renovations that increase your property’s value, consolidating high-interest debt (like credit cards), or funding a major investment. It’s crucial to have a disciplined plan for the cash and to understand that you are increasing your mortgage debt.

Your primary point of contact is your mortgage servicer, whose contact information is on your monthly mortgage statement. If you are unable to resolve an issue with them (for example, a dispute over a shortage calculation), you can file a complaint with the Consumer Financial Protection Bureau (CFPB) or your state’s banking or financial regulator.