Escrow?

[sunnysandiegan]

Our mortgage lender required escrow accounts once upon a time, so we have it through them. It earns interest and they pay the county property taxes on time twice a year. Easy, peasy.

However, the interest earned is pathetic...along the lines of a penny per month.

We have ING Direct accounts and could earn a smidgen more interest. We're good at saving money for specific purposes and we pay our bills on time. I called our lender and found out we qualify to NOT have an escrow account now (policy change and our LTV ratio qualifies us). I just have to write a letter, including some basic info, and fax it to them (have the number written down).

Is it really worth it???

[GardenStream]

We stopped escrow 8 years ago. It had nothing to do with any financial gain. We stopped because the escrow company failed to pay the property taxes on time the first time they came due. It ended up being a major PITA because the county wanted to charge a late fee and the escrow company refused to admit they screwed up. It took hours of phone time to get it fixed without costing us anything additional.

We budget for the taxes and move a small amount of money into a special savings account every month (DH gets paid monthly). It works much better for us because. We are good with planning and budgeting and TBH, we're much more comfortable knowing that we're in control.

[laohaire]

We originally had our mortgage with a different company, and escrow through them was a nightmare. It was required, yet they were completely inept and paid late, etc. We were really angry about this, because we are very responsible and would have gotten everything paid on time, but our hands were tied.

So we're with a new lender now, and while according to Internet reviews this lender does plenty of scummy things (not to us, yet), they have paid the taxes and insurance without a hitch, thankfully.

Yet because of our original experience, we really would prefer to have full control over our own money and our own bills. So yes, we will take over as soon as the escrow requirement is lifted.

Given the interest rates these days even at ING, you'll only be earning maybe 40 cents a month (just based on, say, $500 in there). While it may be 40 times what you are earning there, I am not sure 39 cents a month (and speaking of that number, you'll have postage costs to take over, lol) is worth it per se, but I personally would rather have the control and peace of mind. Though my current lender has been fine so far, I know things could change, and I just don't trust anyone more than myself.

[mnnice]

Originally Posted by GardenStream 

We stopped escrow 8 years ago. It had nothing to do with any financial gain. We stopped because the escrow company failed to pay the property taxes on time the first time they came due. It ended up being a major PITA because the county wanted to charge a late fee and the escrow company refused to admit they screwed up. It took hours of phone time to get it fixed without costing us anything additional.

 

We had the same experience.  Less hassel to do it ourselves and have it done right.

[nd_deadhead]

As long as you know you can have the money available when it's due (and it sounds like you have that covered), I can't think of a down side to managing your own escrow account. Go for it!

[Carson]

Yes absolutely it is worth it to be in control of your own finances.

For me the concern was our county and the bills it sends.  I have been here for 3 years and each year have to go fight to pay more than is listed (long story!). 

Also, most lenders require you to maintain some sort of minimum balance which may or may not be indicative of what you actually owe.  In my previous loan, I had to write a $1k check to get my balance back up, but then the next year they sent me a refund. 

[sunnysandiegan]

Originally Posted by Carson 

Yes absolutely it is worth it to be in control of your own finances.

Also, most lenders require you to maintain some sort of minimum balance which may or may not be indicative of what you actually owe.

Your post reminded me of the reason I first investigated this. Our monthly property taxes amount changes every six months because they overestimate or underestimate what will be due. It isn't a large variance (less than $10 every time, varies up and down), but it bugs me that we are bound by their policies and procedures. Having the money tied up in an inaccessible account is a bit annoying, too. We'd put the appropriate amount aside each month, too, but it would be accessible by us for whatever we wanted knowing we still need it every six months to pay the property tax bill. We have nearly a year's worth of essential expenses saved up, so it isn't like we would be scrambling to pay the bill. It is more an issue of control and timing and flexibility.

Thankfully, the escrow company is competent and it has been super easy, which is why I haven't taken over already. Our county also sends us a copy of the property tax bill, so it is all very transparent.

I wrote this original thread very late and interest was the only reason on the top of my head for switching. We live in CA and property taxes are a set percentage of the value of your home. Our monthly escrow amount has always been in the $200-250 range, so it does add up....but still.... I wonder if we would earn enough interest to cover the cost of stamps...

[sunflower.mama]

We escrow taxes because I have never had one issue and I'd rather not be bothered with it.  HO insurance on the other hand, we pay ourselves.  They want a year's premium as padding to escrow.  Needless to say, I'd much rather pay myself and have access to that $$$.

[Carson]

Our escrow does not earn interest that I'm aware - i think it's a state regulation maybe?  With two loans I have had to pay some kind of processing penalty to get out of escrow, more than I'll ever get from interest in our account.  Anyway, even if I just had to pay for the stamp it's just well worth it to take control of my money. JMHO though!

Laohaire - any chance you are with Nationstar?  It's just what comes to mind when i think scummy lender. :P

[laohaire]

Originally Posted by Carson 

Laohaire - any chance you are with Nationstar?  It's just what comes to mind when i think scummy lender. :P

We're with Wells Fargo. From what I understand, mortgage companies and politicians have a lot in common. They're all scum.

[GardenStream]

Originally Posted by laohaire 

We're with Wells Fargo. From what I understand, mortgage companies and politicians have a lot in common. They're all scum.

We're with Wells Fargo too.

[laohaire]

Originally Posted by GardenStream 

Originally Posted by laohaire 

We're with Wells Fargo. From what I understand, mortgage companies and politicians have a lot in common. They're all scum.

We're with Wells Fargo too.

Don't worry about it. They haven't done anything wrong with us, and like I said, there's not really anyone you could call a really honest lender. I don't recall the main complaints about Wells Fargo; they play games with certain situations but we have not been in the situation that people have had problems with. I certainly wouldn't single out Wells Fargo above any other lender for scummy practices.