I recently inquired with our mortgage lender about handling our own escrow. Their answer: Yes!
The primary loan is for less than 80% of the homes value, so I'm not sure why I didn't think of this before!
So...should I do it?
I do our own escrow for things like auto insurance, registrations and life insurance, so I know how to save ahead. It works really well.
I would not need to escrow the same amount as the mortgage company because I have our own emergency fund to dip into should something increase drastically. Right now they need a cushion of 16.6% of my total escrow to cover increases. I would also be able to earn interest on this money!!
Any disadvantages that anyone can think of? Let me hear what you think.
Would you do it?
October 20th, 2009 at 10:01 am
October 20th, 2009 at 10:07 am
Just kept an eye on any proposed house tax increases and upped my dollars put back for those.
I say Go For It!!
October 20th, 2009 at 10:10 am
October 20th, 2009 at 10:17 am
I have annual, quarterly and semiannual bills that I put aside a fixed amount for each month, so I could certainly handle my own escrow, but my mortgage is currently underwater.
October 20th, 2009 at 10:25 am
It doesn't hurt to ask your mortgage lender. I did and wasn't really expecting the answer I got.
October 20th, 2009 at 11:16 am
Check with your town- they may have auto withdrawal option from your checking acct so you won't forget to pay it. I opened up a new account (with a bank giving away a $100 bonus to boot) just to keep it separate from other funds. Good luck!
October 20th, 2009 at 11:32 am
Anyway, YES you should do it. We have always paid our own insurance and property taxes. I have seem to many clients' mortgage companies forget to pay a bill. OF course - it's not their problem when that happens - it's yours! As an aside, our in-laws forgot that their insurance was escrowed when they paid off their home. Someone tripped in front of their house, sued them, and they realized their insurance had been dropped - company never contacted them for payment. Just one more disaster avoided by doing it yourself! (I mean, you figure that has to happen a lot!)
Escrow is only worthwhile if you have absolutely no discipline.
I personally took a higher interest rate so I didn't have to leave my bills in the hands of the mortgage company. Ugh.
October 20th, 2009 at 12:52 pm
October 20th, 2009 at 03:21 pm
October 20th, 2009 at 03:33 pm
It's basically an account that is established by mortage companies to collect money for homeowners insurance and property taxes. The mortgage company then pays for those items out of your escrow account when they are due. It's required on many loans here in the United States.
October 21st, 2009 at 05:09 am
October 21st, 2009 at 10:55 pm