Avoid Mortgage Escrow?

HalMd · #1 (**permalink**) 10-27-2006, 07:21 AM

One book I read suggested that it is better to pay taxes and homeowners insurance directly, rather than paying into escrow.

Does anyone know about this? Where does the savings come from?

Will the mortgage company allow you to make this change?

autoxer · #2 (**permalink**) 10-27-2006, 07:35 AM

Quote:

Originally Posted by HalMd

Where does the savings come from?

Lost interest. http://www.mtgprofessor.com/escrows.htm

Quote:

Originally Posted by HalMd

Will the mortgage company allow you to make this change?

That depends on the lender and the loan to value ratio. But generally if you have 20% equity, it is easier to waive the escrow.

HalMd · #3 (**permalink**) 10-27-2006, 07:37 AM

Thank you, thank you, thank you, thank you.

LuxLiving · #4 (**permalink**) 10-27-2006, 08:58 AM

Yes and some mortgage companies want a large buffer IN CASE your taxes and insurance go up during the year. Understandable. BUT, in our case this past year they started wanting 18.00 a month extra for buffer. That's 216.00 a year that we could be earning interest on ourselves. We NEED that interest for exactly the same reason - IN CASE our taxes and insurance go up - at least we'll have a head start on paying them. Needless to say, we pulled ours and pay ourselves monthly into a savings subaccount and then pull it out when it's time to make the payment.

pearlieq · #5 (**permalink**) 10-27-2006, 07:17 PM

Quote:

Originally Posted by LuxLiving

Needless to say, we pulled ours and pay ourselves monthly into a savings subaccount and then pull it out when it's time to make the payment.

We do the same thing. I prefer being in control of how much money I set aside for taxes and being the beneficiary of the interest money that generates.

We were able to drop our escrow in one quick call to our lender. Since we had over 20% equity, they dropped it right away and had a refund check to us in a week or so. We put that into an ING account and add too it each month. I'm much happier, though you do have to pay attention to due dates and actually remember to pay your tax and insurance bills!

HalMd · #6 (**permalink**) 11-13-2006, 03:17 PM

Just to follow up, I wrote a letter to our mortgage company last week, and today they waived the Escrow. Simple as that! Thanks Autoexer, Lux, and Pearl!!!

tinapbeana · #7 (**permalink**) 11-14-2006, 06:02 AM

some mortgage companies don't require escrow to begin with...