Experience with escrow (insurance, mortgage, loan)

[amos13]

Hello!
First time home buyer questions: what is your experience with escrow? We're wondering whether we should take it or not... We are putting down more than 20% downpayment, so we have the option of opting out. We are also very good with savings and money management, and good with paying bills on time.

For now it seems the pros are: convenience of transactions (not having to follow, calculate and schedule up to 4 different taxes and interests), smoothed out payment process, bank is liable for late payments instead of us. Cons come mostly from websites we've read: money lost from the interest we could be getting, paying large sums at the end of the year can be painful (especially adding to the holidays, to the hassle of keeping track of everything, and one of us is on a less stable work position than the other), bank can forget to pay all the necessary taxes and bills will be sent for us with interest and late fees.

It will be so helpful to hear about your experience with escrow account - do you recommend it? Do you have problems with it? Any information will be welcome!

Thank you in advance!

[cheryjohns]

The escrow process works smoothly. I haven't heard of any cases where the lender forgot to pay and fines or late fees got added. The convenience usually outweighs the minuscule amount of interest you would make.

[Rip808]

I am also good with keeping track of my finances/expenses and I decided to opt out of escrow and have never regretted it. I guess its to whatever you feel like doing.

[theking_z]

I opted out of escrow and i am first time home buyer as well. I just want to be in full control of my money.

[DSL_PWR]

I would rather have that money doing something or making money for me all year long verses making the bank money just sitting there.

If you are bad with finances then you should escrow. If you are good at managing your money then it might be best to handle your affairs on your own.

[Lowexpectations]

My mortgage payment is 400.00 something a month. I send 1600.00 a month to citbank to a savings account named "housing" and that's where we pay taxes and insurance. It's not difficult and I'd rather earn the extra interest even if it's only 1%

[jasonamd]

I use escrow and have had no issues. The first year they over estimated the taxes so I got a nice check at the beginning of the next year for the overage and they adjusted the payment according. Less things to have to worry about. By saving it and paying it on my own from a regular savings account I might make a few cents in interest...not really worth it.

[Lowexpectations]

Originally Posted by jasonamd

I use escrow and have had no issues. The first year they over estimated the taxes so I got a nice check at the beginning of the next year for the overage and they adjusted the payment according. Less things to have to worry about. By saving it and paying it on my own from a regular savings account I might make a few cents in interest...not really worth it.

I make roughly 90.00 handling on my own but it's more be able to access the money if needed or not allow the mortgage company to build a cushion that's not needed like wellsfargo did to me with a 3k cushion on a 125k house

[jasonamd]

Originally Posted by Lowexpectations

I make roughly 90.00 handling on my own but it's more be able to access the money if needed or not allow the mortgage company to build a cushion that's not needed like wellsfargo did to me with a 3k cushion on a 125k house

Having access to the money is what gets some people into trouble though. I don't think I'd have any problem, but to me is just convenient to let the bank handle it. A 3k cushion seems rather excessive. My bank requires 16.6% of the total of the escrow expenses...which is nowhere near 3k.

[Lowexpectations]

Originally Posted by jasonamd

Having access to the money is what gets some people into trouble though. I don't think I'd have any problem, but to me is just convenient to let the bank handle it. A 3k cushion seems rather excessive. My bank requires 16.6% of the total of the escrow expenses...which is nowhere near 3k.

Well it depends on what you would call getting in trouble. If people would tap the savings for a vacation, new tv or something silly I understand that's not what I was referring when I talk about access to the funds if needed. I don't like loaning money to the govt during the year only to get a check back in April from them. In both cases I'd rather keep as much of my money as possible