Mortgage Escrow Acct - Keep or Cancel?

[99Saturn]

So, last time I checked, I have the right shortly to cancel the escrow account on our mortgage, not sure what type of push back I will meet (if any) if I try to do so, but I'm wondering people's thoughts on doing so; experiences/issues that you have had if you went the route of canceling.

I don't have concern about missing a tax or insurance payment managing myself, honestly I would like the fact that I don't have to chase the bank just in case they forgot to make a payment, but I give up the guaranteed interest that the account accrues as well. Splitting hairs from an interest perspective I suppose, but that's what we like to do around here right.

 

[BMWTurboDzl]

I'd keep it active as long as you have a mortgage.

 

[eljefino]

Sometimes they pay around 3% interest. I wonder if the bank will try to shake you off!

 

[spasm3]

I don't escrow, i just pay my taxes at the end of the year. Its my money. Why let them hold it unless YOU get the interest.

 

[NateDN10]

Originally Posted By: spasm3
I don't escrow, i just pay my taxes at the end of the year. Its my money. Why let them hold it unless YOU get the interest.

He certainly should get the interest. We do from our mortgage escrow. It's peanuts, but we get it.

 

[BISCUT]

Originally Posted By: spasm3
I don't escrow, i just pay my taxes at the end of the year. Its my money. Why let them hold it unless YOU get the interest.


Same here. I have friends who are constantly complaining about how their banks aren't up to date and they get hit with a higher than expected bill. As long as you are able to put aside the money diligently, I see no benefit to allowing a bank to keep my money and pay MY bill when it's due.

 

[Kuato]

Originally Posted By: BMWTurboDzl
I'd keep it active as long as you have a mortgage.


This; I prefer to have it all in one easy payment and not worry about it. But if you're into that level of management, go for it.

 

[TWG1572]

Your decision should be based on how financially disciplined you are. You sound like you are, as am I. I went ahead and canceled mine because I was tired of the bank paying late/ estimating wrong/ what have you.

I see no benefit to the bank having my money in advance and paying a paltry interest rate. However, there is a large benefit to those who don't want to worry about a large bill at year end or may not have the discipline to save up for it.

 

[supton]

We have escrow, and I'm content to leave it as it is (was required for the mortgage). However, the next time I get a late bill I plan to call them up and complain. About once/year it seems I get one from the town, "oops we're sorry". Geez, how hard is to automate these things?

 

[99Saturn]

Originally Posted By: eljefino
Sometimes they pay around 3% interest. I wonder if the bank will try to shake you off!

Haha yes - IIRC NYS mandates 2%, I manually calced the yield over the last year, and it seems in that ballpark. Maybe I'll get a proactive letter returning my funds.

Originally Posted By: TWG1572
I went ahead and canceled mine because I was tired of the bank paying late/ estimating wrong/ what have you.

Originally Posted By: supton
...the next time I get a late bill I plan to call them up and complain. About once/year it seems I get one from the town, "oops we're sorry". Geez, how hard is to automate these things?

^ This is my biggest complaint. To be honest in 2.5 years the institution has never missed a payment, however... I typically call up on the 25th of the month if nothing has posted online, if the first call doesn't work I call a second time by the 27th and ask them which department I should contact when I get a notice indicating my taxes where not paid on time. That almost always gets someones attention, at which point I hold for 5 -10 minutes and get the bill paid, and see the posting to the account by the 30th. The extra annoyance to me is I don't receive a bill, so it's really on me to remember a payment is due and in turn remind the institution.

All that said, it's a little silly to go through that process IMO, which I've probably had to do 3 times (8 payments maybe made out of escrow). I'll admit, 2 of those 3 were at the beginning of the loan and the beginning of a refinance, so it's easier to slip through the cracks I suppose.

As already mentioned, interest is low but given the quick turn around in the money back out the door a decent yield. Nice to put an extra $80ish in interest into the escrow account just for setting it aside.

I'm glad the first response was not, "it took me months to get my funds returned".

 

[PandaBear]

I have an escrow, and that lower interest rate about 0.25% for me, I have no problem with that consider my checking account only pays 0%.

I always pay extra on my mortgage, and I think I'm about 7 years away from paying off my 15 year mortgage.

 

[kb01]

If my escrow account worked the way it should and didn't involve any intervention on my part, I'd go that route.

Unfortunately, that hasn't been my experience at all. At best, they cut their checks at the absolute last minute of deadlines, resulting in unneeded stress on my part, or late fees, and potentially a few days of lapsed insurance. At worst, they forget to cut their checks at all, resulting in nasty-grams from the county sheriff or insurance company.

I've found that it's a lot easier to just automatically transfer money each month to a separate savings account. If I'm going to babysit an escrow account anyways, I might as well just hold the money myself.

 

[MNgopher]

If you are disciplined enough, close the escrow account and take care of it yourself.

Its your money, not the banks. My escrow pays no interest. On top of that, the bank can't seem to figure out how to pay a bill on time. The latest was my home insurance. The bill came in mid December and was due in late January. The bank didn't pay it until late January, and payment was late to the insurance company as a result. In the meantime, since they hadn't paid on the due date when I checked, I took care of it so there was no lapse in coverage.

Ridiculous that the bank doesn't trust I will pay the insurance and property taxes on time, but they don't pay on time themselves.