attgig

So, I was looking at my mortgage and my escrow account, and I was wondering, why am I putting into an escrow account? Wouldn't it be better if I kept my money to pay my taxes instead of paying into an escrow account that the bank gets to earn interest off of?

Now I realize that my current escrow was built into the mortgage I have, and so, I don't think I can get out of it, but wouldn't it be better if I put that into my own separate savings account, and paid my city/state when the tax bills came rather than having the bank take care of it?

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Cubsfan

Sure, that would make sense. However, a lot of banks require that you do it. If you don't pay your taxes, then they can take the house, and the bank gets screwed.

For me, to be honest, the amount of interest would be so small that I prefer them taking care of it for me.

zippyjuan

I don't use an escrow on my property taxes. Some people are not as good at budgeting so they like to have that money taken out every month instead of having to come up with it all at once (at least half of it at once).

Contact your lender if you would like to try to change it.

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cheapie

heck yes. i switched over years ago.

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renovation

for me the small yearly fee is nothing compaired to. the extra worry that come's from having to keep enough tax and home owners insurance money to pay these every year. the $30 it cost me a year extra is well spent. over the lenth of the mortgage 15 years the true diffrence might be $50 in my pocket.thats a small price to pay for peace of mind.

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Daedalus

I thought it was the buyer's option. I think I remember being able to choose to not have an impound account. It made no difference to the loan terms.

So does your payment go up when the taxes go up, and vice versa? Does the monthly statement reflect tax changes?

Cubsfan

I think it's always an option, but with certain loans I think they require it (like, say a 100% or 95% loan). I think that once that loan drops below some threshold you can change it so that it's not taken out.

brainsmile

for many it's just one less bill

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VTGreg

I asked about it at our closing and they said our rate was dependent on it using escrow. We put down over 20% on the house.

I'm not sure if they would be willing to reconsider now but it's just another way of them protecting the loan and collateral.

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