Paying property taxes directly

mjrube94 · #1 (**permalink**) 03-24-2005, 02:05 PM

Is there any benefit/drawback to paying my property taxes and house insurance myself, rather than having the money taken out from my mortgage payment every month? My property taxes are $7892, and my insurance is $879 ($8771/yr), but they take out $788.65/mo ($9,464/year). That's over $50 more each month than the payment itself! Then to boot, every year they increase my payment a bit because of shortfalls in my escrow account! Will the mortgage company allow me to pay directly? What should I watch out for if I do this, or is it a no-brainer?

DivaJen · #2 (**permalink**) 03-24-2005, 02:29 PM

We pay our taxes and insurance directly. The benefit that I see is that we're earning interest on that money during the year, rather than the lender.

gakline · #3 (**permalink**) 03-24-2005, 02:53 PM

I also pay directly. I was charged a small fee to get rid of my escrow account. But it's worth it. Like Diva said, you're earning the interest on that. Also with taxes, it's easier to fight them because you know exactly how much the bill is without pulling out your statements. I think it also makes you more aware of how much you pay. Also, with the insurance, you can shop around for the best rates, I think most people get to lazy to shop on their own and continue to pay outrageous amount for insurance. Again, it makes you think twice when the bill comes due, if you can get it cheaper.

sbsake · #4 (**permalink**) 03-29-2005, 07:37 PM

Its always good to earn the interest in stead of the bank or Gov. Alot of people ovey pay taxes during the year when they could have earned interest on that money ... but uncle sam loves it

gakline · #5 (**permalink**) 03-30-2005, 06:19 AM

Ugh. I just just read in the paper this morning that my property taxes were going up about 5.8% and how it's the largest tax hike in a few years, and how horrible it is, yada yada yada. Then I started to thing about it, and it's not that bad (other than the fact they're going up) I think it'll end up about $150. or an additional $75 on each installment. Well there's where my refund's going

singinjeannie · #6 (**permalink**) 03-30-2005, 06:44 AM

I use my tax return to pay my real estate taxes almost every year. Not a good plan, but it seems to work out.

mccartygirl · #7 (**permalink**) 03-30-2005, 10:03 AM

This has been a topic with my husband and I for a few months now. I told him I wanted to stop paying into escrow for many reasons. The biggest is my OCD! The winter taxes were due 2/14 and they didn't pay them until 2/14, that kind of freaked me out. I want to know when that check was mailed and cashed! Secondly, I want to gain interest on that money. My question is - I have about $1500 in my escrow account currently and I want to stop paying into it, can I get that money back and how do I go about not having to pay escrow. The insurance I got with my car insurance and I got huge discounts because we've been with them for 7 years and we have 2 cars through them. Where do you live MJRube? I thought a little over $5000 a year was a lot. My mom only pays $1200 a year but she's in a small town.

mjrube94 · #8 (**permalink**) 03-30-2005, 12:19 PM

Thanks for all the great advice - we're going to start paying directly

McCarty Girl: Our mortgage is with Washington Mutual - check with your lender directly in case they have a different process. The first thing WM did was make sure that our loan was eligible to pay directly (e.g., must be a conventional loan, must have >20% equity, etc.). If it qualifies, you sign and return a waiver form stating that you want to pay directly. It takes up to 60 days (why so long I have no idea) to close the escrow account, at which time they send you a check for any money remaining in the account. You then call your town tax office and insurance company and tell them you want them to bill you directly. Seems pretty simple, and will save me over $50/month.

I live in Bergen County New Jersey. The housing prices have gone through the roof (luckily after I bought mine!) and the property taxes are huge. Also, the County is making each of the towns go through a reassessment, given that it's been >10 years since the last one. Our town is doing ours later this year, but based on the experience of other towns around me, I'm expecting my property taxes to go up another 40% (yikes) beginning in 2007. Gives me some time to figure out how I'll make up the difference!