waiving escrows...

[jk70]

who does it? My first house I didn't but my next home I'm thinking about it. But then I realized I would probably be keeping my savings for property taxes and insurance in a low savings account (my escrow account that is my short term savings account).

I did think about saving it to my stock account but seems to be too short term and I would also generate fees everytime I sold an investment.

I get charged less fees "not waiving escrows" as opposed to waiving.

So why do it?

[oreo]

I am doing this right now. I never have had an escrow account but with this refinance, I'm actually paying $450 to NOT have an escrow account. To me I think part of it is habit and part of it is control. I have just heard stories about the taxes not getting paid on time and it makes me nervous to have someone else paying something so important. The other issue I have is that if I want to change home owners insurance it seems like it would be a lot more work. I'm looking forward to seeing other people's reasons...maybe I can add them to my list!

[phil5185]

So why do it?

I don't do it - if one of our rental houses burns down and it turns out that someone forgot to pay the insurance premium, I don't want it to be me - I want it to be the loan company. That way the corporate lawyers from the loan company and the insurance company can fight about which of them has to pay.

[Deleted]

We don't have an escrow account. I don't think i paid more to set it up that way, but i was a bit 'newbie' when we bought this house... our first, maybe they tacked a fee in ther somewhere. Taxes and insurance aren't much here... Spring just came and its $467...

[Plain Old Petunia]

I like having an escrow account. I had the option of not having one with my current mortgage, but I opted for. To each his/her own.

[upstatemom]

Oreo, I never heard of paying a fee to get out of an escrow, but then again I have been out of banking for 10 years. Just curious if its national bank or a local bank that charges you and is it a one time fee .
We have always opted out of having the bank/ credit union escrow for us. My husband does it bi-weekly in a savings account. The HUD laws that govern the escrow allow the bank to have too much of a cushion as far as I was concerned.

[oreo]

I have never had to pay a fee before (and I've refinanced at least 3 or 4 times in the past) so I was surprised that there is a fee this time (one time fee). I'm using a mortgage broker so I'm not sure who the bank is (I suppose I could ask but it didn't really matter to me).

Since this is where I live, it would stink to have to wait for the insurance company and mortgage company sort things out in court before I could get any money to rebuild my house. I have an emergency fund but it isn't THAT big (to cover the cost of rebuilding the house)! Plus I'd have to pay my own lodging the entire time while they sorted it out. I just don't like the risk. Since I only have 1 house, paying these things myself isn't a big deal. If I had several properties (rentals) I might feel differently...

[upstatemom]

Oreo, I just did a search and one discussion I found someone said the the non escrowing fee was from FANNIE and FREDDIE. I guess they need all the money they can get

[schildi]

I don't escrow because I don't want the bank to miss a property tax payment and then have the runaround.
Phil, you have an escrow account for your primary residence (I think the OP asked about his own home, correct me if that's wrong)? I am a little bit surprised about that, Phil!

[Deleted]

AT age 50, I finally got a mortgage without an escrow and I'm thrilled. The previous bank wanted to charge me 25 basis points more if I didn't use an escrow account. I manage to pay all my other bills on time; I can certainly manage to pay property taxes and insurance (and have, for the last 8 years). I now have an account with BankDirect, where the float earns a measly interest rate but I get 100 AA miles per month per $1,000 average balance. I'm going to stash as much of my liquid funds in there as I can.

[mesquite77]

I'll never have an escrow again, as I'm tired of having to hold the banks' hands to be sure they timely paid the insurance and RE taxes. Chase was the worst they were 0/5 in years paying the correct amount of taxes. I've refi'd and paid a small fee not to escrow.

Our rental property insurance policies are all lined up and due at the same time and I can choose to pay 100% or 50% of the RE in the current year depending on our income tax situation.

[Deleted]

I do not have escrow and I did not have to pay extra to do so. I like getting my interest and cc rewards for the bills. I like that we only have to pay $253 a month if we do not have renters because I save extra when we do (duplex). I feel like I have more flexibility then if I had escrow. Also, I have heard to many horror stories about the bank not paying the taxes or insurance and I am a control freak.
ETA: I am looking at my first full rental and every mortgage company is requiring me to have escrow because I have not been a landlord for 2 years.

[schildi]

Mar 2, 2011 19:05:10 GMT -5 phil5185 said:

So why do it?

I don't do it - if one of our rental houses burns down and it turns out that someone forgot to pay the insurance premium, I don't want it to be me - I want it to be the loan company. That way the corporate lawyers from the loan company and the insurance company can fight about which of them has to pay.

I hope you don't forget to escrow your car insurance also. :-)
Phil, you have an escrow account for your primary residence?

Our mortgage is with ING, and before that was with a small local bank. We never had to pay anything extra to not escrow. In fact, ING did not even have the option available to escrow. I never had an escrow account, and will never have one for as long as I can avoid it.

[Sharon]

I don't have an escrow account. I did with my previous house and it was a freakin nightmare trying to get them to pay things on time and then to pay the correct amount. Out of the 4 years I lived in that house I had problems with them paying my property taxes 3 times. It would take phone calls, faxes, and more phone calls to get things resolved. Another year I was being threatened with the high cost home insurance that the mortgage company would purchase for you because the homeowners insurance wasn't paid.

[DVM gone riding]

I do it (opt out of escrow) just my personal preference not nec a way to get a better int rate.

[schildi]

Mar 2, 2011 22:39:41 GMT -5 Sharon said:

I don't have an escrow account. I did with my previous house and it was a freakin nightmare trying to get them to pay things on time and then to pay the correct amount. Out of the 4 years I lived in that house I had problems with them paying my property taxes 3 times. It would take phone calls, faxes, and more phone calls to get things resolved. Another year I was being threatened with the high cost home insurance that the mortgage company would purchase for you because the homeowners insurance wasn't paid.

LOL, so the mortgage company threatened you to buy coverage for you at your cost because THEY for got to pay the insurance that you already paid for. That's a good one!

[Deleted]

I can't ever recall having to pay into an escrow account but we might have with our condo purchase and/or 1st house because we only put 10% down. Generally speaking you don't need an escrow acct if you put 20% or more down (or have equity exceeding 20%).

10+ years ago it made no sense to escrow taxes and insurance because you could make some money in a MM account and the bank gave you nothing in exchange for holding your money hostage. I, too, have heard plenty of stories about the Bank being unable to properly estimate tax payments so a constant problem with shortages and overages. I'd need a least a 1/4% interest rate deduction to make it worth my while to make sure they got their accounting correct.

[msventoux]

I opted out of escrow also. I didn't like that they kept changing my mortgage payment because they would way over or underestimate the taxes and insurance. It's not that difficult, the amounts have been within $50 of the prior year balance, but they couldn't figure it out.

[jk70]

I was talking about my personal residence. I guess I'm not surprised that some folks had problems when it was escrowed, although my first home for 6 years we never had a problem. My question was pointed at the view of what is the advantage from a financial standpoint. Never considered the incompetence of lenders screwing up the amounts. I will now consider that

[bean29]

I don't think I have ever had an escrow account on my primary residence.

We own three other properties with two mortgages on them. I get 3 escrow checks. For the taxes. The insurance is not escrowed. If the tax check is short - I pay the difference. If it is over sometimes I take the check to the bank and have them cut a new one - the taxing authorities have taken to saying they will issue a refund at about the 20th of January. I have never had an issue with not having the tax check on time - but our mortgages are with local banks not large national banks.

[zibazinski]

I've never paid escrow and was actually surprised to find on these forums that people do. I guess it helps those that have trouble budgeting but I am too much of a control freak, I suppose, and NO ONE uses my money for free.

[Clever Username]

Mar 2, 2011 19:05:10 GMT -5 phil5185 said:

So why do it?

I don't want it to be me

Oddly, the bank concurs with you, Phil.
Your burt down house or home lost to RE taxes (interesingly invalidates the mortgage).

[exafchick]

My mortgage is through HSBC and since I didn't put 20% down, escrow was automatic. I'd like to do it myself, but until I get below a certain dollar amount, they won't let me. My mortgage payment changes yearly when they re-estimate my taxes. This year I think my payment will be lowered since property and school taxes were a little less. So far haven't had any problems with them not paying taxes on time (knock on wood!).

[Tiny]

I didn't have escrow on my main mortgage. I now use escrow on the mortgage for my rental property. I'm already well trained (having kept track of insurance and property taxes for my home) so I basically do the same "homework" for the escrow account. I review the insurance coverage and cost and that it was paid and I review the Property Tax and make sure that it too was paid.

The original set up at closing escrow amount wasn't enough to cover the taxes or the insurance (I'm assuming someone pulled a number out of their butt and used that for the 'escrow' amount) which I easily realized before closing... I thought maybe my mortgage total would change a couple of months after I started paying it - but it didn't so I made sure I had the insurance/property tax shortfall amount in savings so I could cover it if or when it happened. Maybe I was way off in my guesstimate for taxes - the insurance was pretty obvious I had the documentation and the cost.
The Taxes were close to my guesstimate and I sent off a really big check to the escrow account to cover it. I wanted to get this mortgage set up with a nice "fixed" amount each month so I could just set it and almost forget it.
The Lender took 8 months to sent me a notice about how the escrow amount was gonna go up and what it would be.... it agreed with my calculations (and I was already sending that much in attempt to even out my payments) so I was good to go.
I keep an eye on when the insurance and property taxes get paid.... even though I don't cut those checks.
The only difference I'm seeing between escrow and no escrow is that I don't have to write a check.

FWIW: I suspect lots of mortgage holders have NO idea how much they pay for insurance or property taxes because they never pay attention because it's rolled into their 'mortgage payment' and they aren't forced to think about it or do anything. until the big bad bank sends them a notice that their 'mortgage payment' will go up because of an increase in insurance or property taxes.

[tractor]

I have never had an escrow on my primary residence. I think the bank may have asked if I wanted one, but it wasn't required. I find it easier to pay everything on my own. Taxes really aren't that bad and I can run over to the court house to pay them, as needed. I also like the flexibility of being able to adjust my homeowners insurance on an as needed basis without worrying about the bank being involved. I think the insurance company might have to send some verification to the bank on a yearly basis that I am covered for the amount owned on my mortgage, but I guess I really don't know. I don't know what I'd do if the bank required an escrow account, but we have refinanced about five times over the past 18 years and they haven't requested it.