Originally Posted by Teenytoona
Yeah, I've got some research to do... What exactly is PMI and escrow? Why would you be unwilling to do escrow?
PMI == mortgage insurance. If the mortgage company decides that you don't have enough skin in the game (mostly about 20% of the home value), then they'll require you to pay an insurance company to insure the mortgage. If you default on the loan, than the insurance company will reimburse the bank for your loan amount. PP may not have wanted to do this, because it would have increased the monthly cost of the mortgage.
Escrow== to me, means money held for safe keeping by a third party. In this case, some banks require you to pay a them certain amount monthly towards taxes and insurance for that year. Then they use that money to make the once yearly tax and insurance payment. They do this to ensure that taxes and insurance are paid on the property.
The problem with this is that it increases your monthly payment, and ties up money that could be earning interest. And I've heard soooo many stories of the bank forgetting to pay, or loosing the papers etc and causing lots of issues. The monthly payments are estimated, so theres always either a shortfall or surplus that has to be dealt with when the tax comes due.