Mortgage Escrow Questions

[KaizenSoze]

I'm a bit suspicious my mortgage company is playing games with the escrow. For the last three years we have gotten a notice of escrow change that required send an extra check for escrow shortage or there would be a small increase to the mortgage payment. This is not something I remember happening with previous mortgage services. There was no increase in property taxes this year.

Second question. Has anyone gotten their mortgage servicer to drop escrow? We can definitely handle the taxes and insurance payments ourselves.

[gardeningandgreen]

If insurance has changed or if the laws in your state have changed. Also has any changes been made to the specials on your home? That would affect the escrow payment as well. You are generally able to get rid of escrow at any time just by requesting it unless you are required for some reason to have it(eg low credit, low down payment).

[HPstache]

You should be able to find or request a full-detailed escrow report that shows all of the 'ups' and 'downs'.  I can just about guarentee there's no funny business going on, property tax increases and insurance premium increases happen all the time.

[charis]

Usually the shortage is caught at the end of the year and adjusted going forward.  So even if your taxes were exactly the same this year, which is highly doubtful (nothing in school, county, city or town changed?) it could be an adjustment for the prior year.

[boarder42]

you typically will end up with a higher rate by not escrowing b/c mortgage companies view it as riskier to not escrow for them.

[Psychstache]

I canceled my escrow account a few months into my mortgage. The benefits were 3 fold:

1. I get to control when I make my property tax payment, which has allowed me to pay them every other tax year (Such as Jan and Dec 2015) to actually make itemizing worthwhile.

2. Monthly payment is lower and my money isn't being held and wasted.

3. Paying my property tax and insurance myself gives me the flexibility to use a new CC to meet a spending requirement for a bonus points.

[frugaliknowit]

Just review the reconciliation statement they send you.

With interest rates so low, it's not worth sweating over.  It's super convenient to have the bank pay the taxes. 

[KaizenSoze]

Thanks for all the information. I'll just keep things the way they are for now.

[With This Herring]

Just watch out when the escrow is closed either at your discretion or at the end of the mortgage.  Set a reminder to make sure that you receive the tax bills.  I had a business client whose property taxes I questioned because the tax expense on one property was rather low.  It turns out that when the escrow was closed (upon a mortgage refinance), the bank never notified the county to start sending the bills to the business instead of the bank.  The bookkeeper at the business got that fixed, but by that time there were late payment penalties due as well as the tax.

[ender]

I canceled my escrow account a few months into my mortgage. The benefits were 3 fold:

1. I get to control when I make my property tax payment, which has allowed me to pay them every other tax year (Such as Jan and Dec 2015) to actually make itemizing worthwhile.

2. Monthly payment is lower and my money isn't being held and wasted.

3. Paying my property tax and insurance myself gives me the flexibility to use a new CC to meet a spending requirement for a bonus points.

We're also not using escrow and I'm curious about (3) - I know we can pay our insurance with a CC but did you have troubles paying property taxes with one? Or paying your property taxes extra in one year? When I look at our county assessors site I see property tax payments made nearly always on the same months every year.

you typically will end up with a higher rate by not escrowing b/c mortgage companies view it as riskier to not escrow for them.

We just had the option and I guess our mortgage provider allows anyone putting 20% down to do this (if you ask). We already locked the rate and it didn't change when we waived escrow.

[Psychstache]

I canceled my escrow account a few months into my mortgage. The benefits were 3 fold:

1. I get to control when I make my property tax payment, which has allowed me to pay them every other tax year (Such as Jan and Dec 2015) to actually make itemizing worthwhile.

2. Monthly payment is lower and my money isn't being held and wasted.

3. Paying my property tax and insurance myself gives me the flexibility to use a new CC to meet a spending requirement for a bonus points.

We're also not using escrow and I'm curious about (3) - I know we can pay our insurance with a CC but did you have troubles paying property taxes with one? Or paying your property taxes extra in one year? When I look at our county assessors site I see property tax payments made nearly always on the same months every year.

Guess this depends on the tax office. For me, I get a letter in late November/early December that tells me my tax bill. As long as I pay before Feb 1, there is no late fee. For this last go round, I paid my 2014 taxes in Jan 2015, and my 2015 taxes in December 2015. This was all through the county website.

On the CC part, the website had a CC option for me to pay with. They do attach a fee, so it is not worth it unless you are trying to hit some kind of threshold. I usually pay by direct deposit, but I did pay the fees one time to earn a SW companion pass.