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Mortgage - To Escrow or not to escrow? Pros and Cons
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Anonymous
| Do you escrow for your taxes and insurance, or do you choose to handle those yourself? I figure why give the bank money just to hold and do as they please. I am a disciplined saver and feel that I can handle taxes and insurance on my own. Any advice - pros and cons? |
Anonymous
| Absolutely do not allow the bank to provide insurance - you will pay considerably more than if you procure it yourself. As for taxes - it's one less bill to pay, but some mortgage servicers have a history of not paying the taxes on time. If this is a concern, I'd do it myself. |
Anonymous
| I thought that rates and/or closing costs are usually higher for mortgages without escrow, but I could be wrong. If it were super-easy for us to get rid of the escrow requirement on our mortgage, I probably would. |
Anonymous
| I did it myself. It was easy and I wasn't paying extra to the bank for them to screw around with. |
Anonymous
| For 9:34--our family chose our own homeowners' policy, etc., but the bank pays the premium out of our escrow account. |
Anonymous
| I escrow for property taxes. I'm not sure it is the wisest financial decision ever but it works best for my chaotic mind. One less bill to deal with and no sticker shock when the bill arrives. I do typically get a small refund every year from the escrow so it is kinda like giving the bank an interest free loan. But, that also may be because property values have dropped a little in my neighborhood. |
Anonymous
| I have an escrow account and don't really see the downside other than they are holding my money (though they do pay (pitiful) interest on it). It eliminates having to worry about paying the tax and insurance bill. I purchased my own insurance though, and just gave the info to the bank so they pay the premium out of the escrow. I'm not familiar (as a PP mentioned) with having the bank provide insurance for you. I didn't even know that was an option as I just shopped around on my own for ours. |
Anonymous
| We escrow. I am just as happy to let the bank pay those bills (especially as MoCo bills are due in Sept. and again in Dec.). It's not like I'd be earning much in interest. The only time it was a little inconvenient was when we refinanced within a week or two of the due date for property taxes, and our tax payment from the old mortgage co. hadn't been posted yet so the new mortgage company made us pay those taxes at closing, and then I had to ask MoCo for a refund a couple weeks after closing, but it's wasn't a big deal. |
Anonymous
|
I've done both.
But when we did not escrow, we paid a higher interest rate - not a huge amount but a tiny bump. Not sure I would do it again, worrying about the taxes and insurance is stressful. So, there are two schools of thought. Back in the day when savings account rates were high, it made a lot of sense to not escrow as you could have that money grow in your account. Now that you're lucky to get 1%, it's not worth the hassle or worry. Re; Insurance. 9:34 - I have never heard of a bank picking your insurance co. You pick your own, and they then deal with the bank in order to get paid every year. |
Anonymous
| Our interest rate/cost of mortgage is not affected by the decision to escrow or not. So we chose to handle the property taxes, insurance payments ourselves. It's pretty easy... |
Anonymous
| We escrowed at first, but the bank double-paid our taxes. Dealing with that, given that we are in DC, was a mess. So, we stopped escrowing. Seven years later, I am annoyed by the huge semi-annual bills and wouldn't mind escrowing. |
Anonymous
Ditto. |
Anonymous
| Our monthly payment has gone up and down by large amounts a few times now as our bank keeps on screwing up in various ways. However, I still can't be bothered to do it myself. |
Anonymous
| We escrow but were able to chose our own homeowner's policy. The insurance company requested our bank info and took care of everything. |
Anonymous
| No mortgage company I've ever used has given me the option, so we've always had to use escrow. Would love to get rid of it. |