Author Topic: Self-escrow for real estate taxes and insurance: Where to store funds?  (Read 3131 times)

neo von retorch

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So I'm well below the 80% LTV now, and am closing my lender's escrow account, which was giving me just 0.15% interest on those funds. But this is money I'll need to pull out for the big tax bills in March and August. Where can I keep it and get better returns, without the risk of equities?

Anything else I should consider as I make this switch?

AH013

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Re: Self-escrow for real estate taxes and insurance: Where to store funds?
« Reply #1 on: August 22, 2014, 12:06:47 PM »
HI checking account or MM.  Your money isn't going to be able to benefit from longer term products, as taxes are usually due every 3-6 months and same for insurance.  Oddly most CDs, T-Bills, and cash mutual funds also pay worse rates than a high interest checking account or money market fund.

Checkout CapitalOne360 (old INGDirect) or similar internet-based MM funds on bankrate.

neo von retorch

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Re: Self-escrow for real estate taxes and insurance: Where to store funds?
« Reply #2 on: August 22, 2014, 12:23:35 PM »
At my credit union, the escrow and my "savings" account are both 0.15%. Checking is 0.1% and the money market is 0.2% (same as CapitalOne.) So that works for me, and is extremely easy (just set up automatic transfer in place of existing escrow payment) and then use bill payer or just be sure to mail my payments as each tax bill becomes available (keeping in mind the "2% early pay discount".) I thought, perhaps, there might be other places that we could keep that short-term money, but this is fine with me.

WisconsinFI

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Re: Self-escrow for real estate taxes and insurance: Where to store funds?
« Reply #3 on: August 22, 2014, 12:24:49 PM »
High yield savings account (I can get 1.75% on up to 25k) Often requires some of the following: 15 transactions, direct deposit, billpay use.

I personally fund some of the $ that was originally going to escrow into my p2p lending account. Since payments come through all of the time, I'll just build up cash instead of reinvest P & I payments in Nov/Dec to help foot the bills.  Probably risky to some, but I have plenty of other safety nets in place if something were to happen.

neo von retorch

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Re: Self-escrow for real estate taxes and insurance: Where to store funds?
« Reply #4 on: August 22, 2014, 12:33:24 PM »
Ah - a quick internet search found me GE Capital Bank Online Savings, 0.95% with no requirements. Kind of cool - not a huge difference (might be $20-25 more per year over lender escrow) but not nothing!

GGNoob

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Re: Self-escrow for real estate taxes and insurance: Where to store funds?
« Reply #5 on: August 22, 2014, 12:42:57 PM »
Now you've got me wondering...is my escrow account mandatory? I e-mailed my lender to ask, but here's what I found online:

Quote
The Veterans Administration (VA) does not require lenders to maintain escrow accounts on VA-guaranteed home mortgages. However, the VA does require that lenders ensure that the property is covered by sufficient hazard insurance at all times and that property taxes are paid. So, most lenders use escrow accounts to ensure compliance with this requirement.

So they may require it for compliance reasons.

neo von retorch

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Re: Self-escrow for real estate taxes and insurance: Where to store funds?
« Reply #6 on: August 22, 2014, 12:46:19 PM »
I also noticed on another thread this benefit... you can pay insurance bills with a credit card (depending on your provider, assuming no fees, etc) and get cashback/rewards (in my case 1.5% with Capital One) - since my insurance is only $311 is this is only about $4.66 a year, but again, it's not nothing :-)