Do you not have an escrow and how much of a pain is that?

[bumcat]

We just recently refinanced the house. Knocked off another 8 1/2 yrs and interest is lower.
I'm thinking about not starting an escrow account. Putting away the money is not a problem.
My question is - Are there any problems with doing that?
I've asked coworkers and they say they would be afraid to do that because the money is due all at once plus they say it would be a pain which is the part I don't get?
The way I look at it - you don't have an escrow once the house is paid off so why would it be a problem now?
Pros and cons please, thanks

 

[LisaTx]

We refinanced a couple of years ago and the escrow was not included. We just opened a savings account at the bank and have the escrow money automatically transferred each month. Easy as can be.

 

[decker96]

We do have escrow but after our next property tax bill is paid, we are taking off the escrow. We have already talked to the bank and this is fine with them. The thing I don't like about it is at our bank anyway, they have to keep a certain amount in the escrow account as a cushion (I can't remember how much right now, but it's a significant amount) in case taxes or our homeowner's insurance go up significantly. We had never had any problems with this until this year. Property taxes went up a little bit, only around $75 for the year, but our homeowner's insurance increased by over $400 ! Because they had to increase the escrow balance in our account, the bank raised our payment by almost $100 a month.
DH and I decided to take it out of escrow. We are planning on still paying the same amount every month that we were, we'll just put the extra $ into our savings account to cover the taxes and insurance when they're due. I don't see how it's a pain, unless you think making two transactions instead of one is a pain.

 

[LindaG4458]

We have no escrow and I like it that way. I like being in control of when and how much is saved for the taxes and insurance. It just takes the discipline to put the money away on a regular basis so it is available when it is needed.

Our old town required the paper tax bill to accompany the tax payment regardless of who was making that payment. Getting it to the out-of-state mortgage company on time (their cycle and mine did not coincide) was a major pain. The town had had some "financial irregularities" with payment and posting of tax bills incorrectly and required the hard copy to cover its behind. It would have been so much easier if I just had to make the payment.

 

[pirateofthecarolinas]

We don't have an escrow. We have it drafted out of our checking account each month.

Lori

 

[RUDisney]

I'm with Linda. I like being in control of when and how I pay my insurance and taxes. I've never had any trouble coming up with the funds to pay any of these bills and I know that I can get the discounted rates. Not so sure that the bank would make sure of that.

 

[bigbabyblues]

Neither our property taxes nor our insurance are escrowed. We pay the insurance every month, and we have a separate savings accout we save for the property taxes. We pay 1/2 the year taxes in March, and the other half I paid last week.

 

[BedKnobbery2]

Also no escrow here. I pay my insurance quarterly and my property taxes bi-annually. I like paying out my money directly, I don't know why; maybe because once my mortgage is paid off, it'll really feel like it is GONE. Since I already pay out my taxes and insurance directly, it won't be something new I have to work into my budget.

 

[hrh_disney_queen]

All not having an escrow account means is that you have to pay the entire tax or insurance bill when it is due-it is your responsiblilty. And if you do not pay it, the bank will pay it for you and set up the escrow account again. If you do not have a problem saving for these bills when they come due, then there is no problem. Banks like escrow accounts because they have your money interest free (in most states) and they can make sure that their interest (your house) is covered. Sometimes a bank can require an escrow account for you, sometimes they let you drop it.

I worked in the escrow department of a bank years ago. They are not collecting a "buffer", they are collecting back money that they paid out on the owner's account over and above what they had collected, which was based on the last (lower) tax or insurance payment. If the tax/insurance bill goes up for the year, the escrow payment will go up, too. So the escrow part of the payment goes up after the account is analyzed because A) they paid out more than they had collected..and B) they are basing the new monthly payment on the increased bill they received for taxes or insurance. Don't know if that makes sense or not, but I used to have to explain this to hundreds of angry callers wanting to know why their mortgage payment went up, even though they had a fixed rate. Which is why now, I DETEST talking on the telephone..

 

[ladydancer]

I haven't had an escrow for almost 20 years. I have no problem paying taxes twice a year and ins. myself.

 

[mudnuri]

We've never had an escrow account.

Our property taxes are due quarterly, and we pay em then.

Our house property insurance, is due annually- and again, we pay that ourselves

Escrows here, are not "mandatory"...however I do believe in this area anyway- it depends on your credit, banks can require them to give a mortgage...and I am pretty sure it has to do with your credit rating..

Brandy

 

[shep]

I have so much money direct deposited into a separate savings account every 2 weeks and at the end of the year there is enough money to cover house taxes and insurance and sometimes enough is left for a hopper pass...

 

[bumcat]

Thanks for all the replies. It sounds pretty simple to me which is what I thought. I just wanted to be sure.

hrh disney queen - I do understand your post. I once received an escrow statement stating I was under a certain amount. Maybe the confusing is from the way some banks word their letters or the way some of us are reading their letters.

 

[my3kids]

No escrow here. The county sends a tax bill twice a year for the house, and I write them a check. Same with insurance.

 

[BuzznBelle'smom]

We don't have escrow either, since we bought our current residence 6 years ago. We did on the previous house, and never had any problem with it, but I've heard of cases where banks flub up and don't pay the taxes on time and stuff. We just wanted to control our own destiny.

It's really no big deal, our town sends the tax bills (school and property separately, different times of the year). Usually the bills arrive ~2 months before they're due. Like others have said, we put the money aside monthly so it's there, and then we get the interest--in an escrow account, they pay interest, but the amount is piddly (of course, interest rates are low now, you're not going to get rich on this anyway!). But I just like the idea of controlling my own destiny. I also feel it gives us more leeway in our insurance choices--we have a rental unit on the premises, we're zoned multi-use and could open a business, etc.

 

[Nancy]

I've had an escrow account for almost 20 yrs and I think it's fine. I only have to pay enough to cover the bills...never had a problem with them not being paid on time and I receive interest on it also. Once a yr we get a statement with all the info on it...if we were short money (which is what it usually was) we can send them a check to cover or they add it to the payment for the next yr. We send them the check and the mortgage pymt goes up only a tiny bit per month.

I could see not having one be a problem if you were someone who was not disciplined with putting the money aside, or dipping into that money for "emergencies". I like the account because I hate paying bills and the less I have to do that the better for me.