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Home >> Lending >> Home Mortgage
Handling My Own Taxes and Insurance
I'm now in a position to be able to have the escrow for taxes and insurance removed from our mortgage. Aside from knowing exactly when my taxes were paid, and earning interest on the funds until the bills come due, are there any other obvious benefits to removing the escrow requirement?
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Many lenders handle escrow accounts because they want to know that the taxes and insurance are paid on time. The loan terms call for this. Bankers will tell you that it is a lot of work for them. If they could know these would be timely without their holding the funds, they'd be all for it.
The benefits to you are that if you are disciplined, you can put that aside and as you noted, earn the interest on it. Many property owners don't have that discipline to put the amount aside or would use it during the year, intending to replace it. If they can't, the lender has to pay it and add it to the loan. They really don't want to do this and it is a default term on the loan.
You control when it these bills are paid and you ensure you get any discounts offered for early payment. Your lender is actually required to do this now. Some borrowers have had problems though, with lenders who were not prompt.
What you need to do is ensure your insurance company and taxing authorities are sending you the bills. You may still need to send copies to your lender, so they know they're paid. Hopefully, depending on your escrowed amounts and interest earnings, your income will offset your costs. If your home is close to being paid off, you'll have to start doing this any way.
Published on BankingQuestions.com 3/21/07
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