VA LOAN IMPOUND ACCOUNTS: Paying Tax and Insurance Payments Direct

By Francisco Lozano, DirectVALoan.com

I received a note from a Veteran today asking me

"Frank, I would like to stop my impound/escrow account with the present mortgage company I have my VA Loan with.  I would prefer to pay my yearly taxes and insurance as a lum sum when they are due direct to the providers and not pay them monthly to the mortgage company.  I have checked with both my local tax accessors office and my insurance company and they both say I can do this.  My mortgage company says since I have a VA loan I have to have a escrow account.  My house is approximately worth 3 times what I owe.  What do I need an impound account for? I thought these were only for loans with 80% loan to value or higher.  What is the rule here?".

Well, that’s an out of the ordinary question….so let’s go for it.

VA does require escrows since most VA loans are at 100% loan to value.  Obviously, in this case, because there is so much equity it seems obvious that he should not have to have an impound account.  But alas, this is the government and there is no mechanism that VA allows for the release of the impound/escrow account features.

So here’s the solution….the borrower would need to refinance to a conventional loan in order to request a waiver of impound account.

In rare cases, sometimes the best loan for Veteran is NOT a VA Loan. This is that case.

If you’re a Veterans and find that you need to refinance to a conventional loan to get the impound account removed, click to http://www.amerisave.com/partner/flozano and in the big ORANGE box titled SEARCH MORTGAGE RATES, fill in your info and click on GET RATES.  You will be given several choices to apply now for a Conventional Mortgage.  When you find the loan that meets your needs, click on it and apply.