Profile picture for 070707

Escrow property taxes or pay ourselves?

Is there anything negative about escrowing property taxes as opposed to paying ourselves separately?  We were thinking of putting 1/12th of taxes into a savings account each month & pay the taxes ourselves.  Recommended?
  • June 25 2009 - Worcester
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

Answers (6)

Profile picture for sunnyview
If the rate is the same, I like to pay it myself because then I get the notices of a rate change or insurance change first hand. It does mean that I have to budget for the taxes/insurance every month to be able to pay it when due. Some people don't like doing it that way. Some companies require an extra .25 or so in the rate for non escrow loans. Others do not charge extra if you have good credit or a set % down. Ask about the rate and your lenders policy then decide if it is worth it to you to pay your own.
  • June 25 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Arla
  • Arla
  • 140 contributions
As Andrew has implied, it really depends on what deal you can get, ask your LO what difference it will make to your rate.

We refinanced in April with no changes in rate to pay the taxes ourselves, and I prefer to handle it myself. If you get a better rate having Escrow, I'd say go with the Escrow, if you get no rate difference, just depends whether you feel you are capable of really making the savings so that you can pay it, or whether you'd prefer the Mortgage company to force you to do that.
  • June 25 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

The question is is it worth it to pay .25% to pay your escrows on your own?

$250,000 loan it will cost an additional $625.  If your taxes are $3,000 a year and paid quarterly you will at most have 3 months in savings or $750.  How much are savings accounts earning these days 1.5% for an orange savings account...that's what $11.25.  If you are doing to save money I don't know how solid that train of thought is.
  • June 25 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for daveskow
the negative is that almost all lenders will charge an additonal .25% in loan fee ( not rate ) if you choose to NOT have the taxes and ins. in an impound account
  • June 25 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Lenders only allow borrowers not to escrow their taxes when the loan to value is 80% or lower.  If this is the case, you may be charged a slight fee to not escrow.

As Joshua stated, it comes down to preference.  If you are disciplined enough to put the money away and not utilize it for anything other than your taxes, then go ahead.  However, if you are not, the convenience of having it included in your monthly mortgage payment may be the better route to go.

Some towns and cities will give a slight discount on your taxes, around 3%, if you pay them in full when they are due.
  • June 25 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

It comes down to preference and comfort.  I am a big fan of paying this myself and controling the money.  Some people prefer the escrow as it forces them to save the money, where they would other wise spend it foolishly.  So if you are a disciplined saver, then you would probably be better off having the money in your hands.  If you are a spender, I would vote for escrowing!  Good luck. 

Joshua Lioce
  • June 25 2009
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.