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Anything I need to know about paying home insurance and property taxes myself?

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  • Anything I need to know about paying home insurance and property taxes myself?

    We will be paying off our mortgage this summer. I have always escrowed the taxes and insurance so once the loan is gone, I'll need to make those payments directly. Is there anything special I need to be aware of? I do get a billing statement now that just says "billed to mortgage company". Do I need to let them know when the mortgage is paid off or will the lender notify them? Or do I just start paying the bills when they come?
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
    * There are no shortcuts to anywhere worth going.

  • #2
    Great job DisneySteve!
    james.c.hendrickson@gmail.com
    202.468.6043

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    • #3
      I’ve never used escrow but my guess is that you should contact the “township” to send the tax bills directly to you and contact the insurance company as well (you will need to anyways to remove the lender from your policy once paid off)

      Watch your timing if any taxes are due in the summer. I pay school tax in July.

      Also keep an eye on the existing escrow balance so you get that money back once the mortgage is paid off.
      Last edited by Jluke; 05-21-2019, 05:30 PM.

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      • #4
        nothing to know except don't be late.

        It can be shocking to folks after they pay off their mortgage, how much their mortgage still is when you pay taxes and insurance. Mine is over $1000 per month. And if I quit paying my taxes, they then own my house.

        We don't ever really own much of anything. We are all just renting. Some longer than others.
        How can you have any pudding if you don't eat your meat?

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        • #5
          I would contact the township and tell them that the mortgage will be paid off and to start sending you the bills directly.
          Things like that tend to get lost in the mix so to speak.
          It would probably be a good idea to contact your lender as well and ask them to contact the county/township/etc. on their own as well and tell them that the loan is paid off and to start sending the bill direct to you.

          Dealing with your insurance company will be a lot easier.
          A quick call to your agent and the bill will start coming direct to you.

          Brian

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          • #6
            Originally posted by TexasHusker View Post
            It can be shocking to folks after they pay off their mortgage, how much their mortgage still is when you pay taxes and insurance.
            It's certainly no surprise. It's right there in black and white on the statement every month.

            Our payment is $1,342.72.
            Principal and interest is $658.07.
            Escrow is $684.65.

            So once the loan is repaid, the P&I goes away but the escrow amount still has to be paid, just to the township and insurance company instead of to the mortgage company. The only real difference is that the insurance gets paid once a year and the taxes get paid quarterly rather than it being evenly spaced out each month.

            I'm looking forward to our expenses dropping by $658/month. Plus we always at least rounded up the payment to $1,400 so that was another $57.28. And since DD finished college last May, we've been paying another $1,000/month minimum so we will actually be freeing up over $1,700/month.
            Steve

            * Despite the high cost of living, it remains very popular.
            * Why should I pay for my daughter's education when she already knows everything?
            * There are no shortcuts to anywhere worth going.

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            • #7
              Originally posted by disneysteve View Post

              It's certainly no surprise. It's right there in black and white on the statement every month.

              Our payment is $1,342.72.
              Principal and interest is $658.07.
              Escrow is $684.65.

              So once the loan is repaid, the P&I goes away but the escrow amount still has to be paid, just to the township and insurance company instead of to the mortgage company. The only real difference is that the insurance gets paid once a year and the taxes get paid quarterly rather than it being evenly spaced out each month.

              I'm looking forward to our expenses dropping by $658/month. Plus we always at least rounded up the payment to $1,400 so that was another $57.28. And since DD finished college last May, we've been paying another $1,000/month minimum so we will actually be freeing up over $1,700/month.
              It's amazing to me that, these days, the insurance and taxes often equal the loan payment. I know of a family that just financed $700K and their property taxes and insurance alone are just over $2,000 per month. That's some heavy freight!
              How can you have any pudding if you don't eat your meat?

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              • #8
                I've never escrowed. Don't see any reason to let a bank hold my money for me when I'm perfectly capable of making the payments myself annually/semi-annually. I definitely would not leave it in the lenders hands to handle - doesn't hurt to call both and make sure they're aware. Also might be a good time to shop around on homeowners insurance if you haven't done so in a while. I switched to AAA last year (didn't even know they had insurance!) for my car and house and it saved me 50% on both for the same coverage plus I now have roadside assistance which has been put to use several times already.

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                • #9
                  Originally posted by riverwed070707 View Post
                  Also might be a good time to shop around on homeowners insurance if you haven't done so in a while.
                  We switched our auto to Progressive last year. They called and asked if I wanted a quote for home and I said yes. We were on the phone for 20-30 minutes going through all of the details. At the end, they came back with a quote that was more then $200 higher than what we currently pay. I haven't sought out any other quotes but we only pay about $700/year so even if we knock off 10%, we're not talking big bucks.
                  Steve

                  * Despite the high cost of living, it remains very popular.
                  * Why should I pay for my daughter's education when she already knows everything?
                  * There are no shortcuts to anywhere worth going.

                  Comment


                  • #10
                    I've never escrowed, but it should be as simple as just telling your insurance co and the county to start sending the bills to you, easy peezy.

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                    • #11
                      The advantage of handling the escrow yourself is that you are not required to have a minimum balance, which is what banks require to help them manage overages in payments when taxes or insurance increase. Of course, it is wise to keep that in mind anyway on your own. When we owned, I really liked handling our own taxes and insurance. Congrats on your pending mortgage payoff.
                      My other blog is Your Organized Friend.

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                      • #12
                        When we paid off our mortgage we had to take the mortgage lien release down to the county to get it recorded. But even if your mortgage company does that for you, I would still go down to the county and make sure it was done (you may be able to see this online).

                        Certainly notify your insurance and your taxing authority. I like to pay my taxes online because it is the easiest way to get a receipt. I set aside money each month for taxes and ins-(like my own escrow). I always pay that bill the day I receive it (don’t want that to be late). Not to say that I am careless with other bills, but I take extra care with the tax bill. If I don’t receive the bill on the expected date, I follow up with a phone call.

                        Here’s an article on steps to take paying off your mortgage.
                        https://www.google.com/amp/s/amp.kip...-mortgage.html
                        Last edited by Like2Plan; 05-23-2019, 02:12 AM.

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                        • #13
                          In addition to what others have said:
                          - Consider raising the deductible on your homeowner's insurance. Now it's up to you to decide how high you want your deductible to be, not the mortgage holder (unless there are HOA restrictions).
                          - Research acceptable payment methods for homeowner's insurance and property tax(es). You may be able to pay your insurance with a CC and no fee, to earn a bit more in rewards. You may be able to pay your property taxes with a CC, but there will likely be a fee. Odds are that you'll opt to pay by e-check or something similar (due to high fees), but if you are lucky and live in a place that doesn't charge a high fee for paying by CC, think about signing up for a new rewards credit card before paying your bill (one that will pay you a nice bonus if you charge a certain amount within a specified time period).

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                          • #14
                            Congrats on paying off your mortgage soon!

                            When we went to a non-escrow account during a refi, we contacted insurance ourselves, and release of the lien triggered the tax statement to be sent directly to us.

                            As an aside, when we paid off our mortgage a few months back, I was surprised at how many hoops we had to jump through with the mortgage lender (BofA). Had to call a special number and get a pay off statement prepared, then had to follow their steps to get it paid off. It had to be paid to a certain department by wire transfer. I was sitting in my bank, paying the last $300 of a mortgage, while looking out a window, across a parking lot at a BofA. The banker helping me asked if I didn't just want to take the $300 across to BofA and save the $35 fee-- nope, they won't take it that way. Apparently my bank would have accepted the pay off that way though. It was interesting.
                            Last edited by FrugalFish; 06-03-2019, 11:07 AM.

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                            • #15
                              Originally posted by FrugalFish View Post
                              As an aside, when we paid off our mortgage a few months back, I was surprised at how many hoops we had to jump through with the mortgage lender (BofA). Had to call a special number and get a pay off statement prepared, then had to follow their steps to get it paid off. It had to be paid to a certain department by wire transfer. I was sitting in my bank, paying the last $300 of a mortgage, while looking out a window, across a parking lot at a BofA. The banker helping me asked if I didn't just want to take the $300 in cash across to BofA and save the $35 fee-- nope, they won't take it that way. Apparently my bank would have accepted the pay off that way though. It was interesting.
                              We had the same thing when I paid off our HELOC last year. It actually took a couple of months to finally get done because there kept being a very small balance remaining. I don't remember the details but I called and got the payoff figure and sent it in the way they told me to, but then a little interest accrued between then and when they processed the payment. It was definitely more trouble than it should have been. Hopefully paying off the mortgage will be easier.
                              Steve

                              * Despite the high cost of living, it remains very popular.
                              * Why should I pay for my daughter's education when she already knows everything?
                              * There are no shortcuts to anywhere worth going.

                              Comment

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