If you are required to escrow for taxes and insurance it is a very good idea to write to your lender annually, demanding proof of payment of real estate taxes and insurance premiums. If lender does not respond promptly, contact your taxing authority to confirm payment of taxes, and complain about lack of response to your state or local financial regulatory authority.

Home owners who have 20% or more equity in their property - that is, if they borrow or refinance 80% or less than value of property - have right to receive a notice from lender that they may pay their own taxes and insurance without escrow. This is a wise thing to do as your money is better off working for you than sitting in a non interest bearing escrow account. This is of course providing that you have financial discipline to have funds available when it comes time to pay your taxes and insurance!

WARNING: Some lenders try to increase mortgage rate when borrower opts to avoid escrow. You should talk to your attorney who will likely advise you it is illegal for lender to do this. Again, MAKE THE EFFORT. It can be worth a great deal of money to you in long term.

Unfortunately, escrow for taxes is a way of life in mortgage industry. However, as a borrower, you have right to review and analyze - and complain if you find that your escrowed funds are not being handled properly. After all, this money belongs to you until it is paid to taxing authority or insurance company.

You can easily check your own escrow account.

To determine whether your escrow account balance is excessive, divide all annual expenses paid out of that account by 12.

For example, if your annual expenses are $1,200, lender would need $100 a month for payments.

If your monthly escrow payment is significantly higher than $100, lender may be overcharging. Some lenders establish separate escrow accounts for each item to be paid, rather than making all payments out of same fund. But regardless of method used, at some point in year, there should be no more than two times monthly payment in account (in above example there should be no more than $200 in account for at least one month of year), or a smaller amount if mortgage contract specifies one.

Should you find that you are being excessively charged you need to contact your lender for a satisfactory explanation because THIS IS COSTING YOU MONEY.

$500 in your escrow account is $500 that is not coming off your mortgage. You are paying interest on this which over years can compound out to significant amounts of money. In fact over a 30 year loan at 8% this $500 will have cost you $5,431.92 in additional interest. Is that worth fighting for?

I encourage you to make small effort required to monitor your accounts. It’s so easy to be complacent and assume that all is as it should be. TAKE RESPONSIBILITY for your finances. When it comes to your money, you are only person you can really trust.

Yuri Szilasi is the owner of

www.BankSentinel.com

Can you see how a sub could use this against builder when asked why he hasn't finished bathroom yet. "Well client told me two days ago that they were changing tiles to another type." It doesn't matter that you did not say that - but it caused confusion and delayed job by at least two days or more.

Instead of wanting access to subs, with whom you have no expertise, you should concentrate on ensuring builder has proper permits and insurance for building. Especially for workman's comp and for liability.

Few clients realize that they can be held accountable, if builder doesn't have correct insurance.

Let's say that a child comes on to site after builder has left for day. Decides to climb to roof and jump. Guess who's liable? Check references of others clients he's built for.

A Final point on access to subcontractors.

Many house building clients have very poor spatial ability and cannot imagine an overview of space being designed for them - they just cannot imagine finished house, never mind what finished colors and tiles look like.

Because of this, they feel need to be able to make changes at any stage of project. This is what is behind this question of being able to speak to subs. You can make changes to your house design at any time as long as you realize that each change will cost you heaps and blow your budget sky high.

To make these changes you ask architect to request a cost estimate from builder for each change. You then can decide if you can afford it or not. If your request is made at worst possible (most expensive) time, you will be told that as well.

What's answer to all this? Make all decisions about what you want and have them included in your plans and specifications.

Question 4.

What does a builder, expect homeowner to do (other than to pay you as and when agreed).

Reply

A builder expects home buyer to be reasonable and realistic in their expectations. The time you spend in planning and thinking about what you want in you home is worth real money to you. If you are not good at planning, an Interior Designer will be critical to your final happiness.

If you can't make up your mind on important aspects of design, go and inspect examples of what you do like and get Interior Designer to incorporate what you want in plan.

The biggest problems that most builders run into is home buyer who change what has been agreed to or is unrealistic in what they want. This is why we have our home buyers sit down with an Interior Designer.

The ASID can sit down with you and help you visualize exactly what you want and help you make any compromises you may have to make.

It is very expensive to make changes during a project. Let's say that you wanted a 17x20 kitchen. Sounds like a big kitchen. Probably too big. However, once cabinets and appliances start coming in you realize that it's too small and want kitchen to be bigger.

This may cost you an extra $50k to make those changes. You can save yourself a small fortune by first working with ASID on floor space, storage, placement, design, and style.