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Old 02-20-2018, 08:46 PM
 
43 posts, read 134,500 times
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First time home buyer here. Is it better to have an escrow account for property taxes and home insurance with the lender or pay these taxes and home insurance by yourself. I am a first time homebuyer so not very knowledgeable at this. I know , typically, if your loan-to-value ratio is below 80% lenders will allow you to avoid escrow account. But what are the pros and cons. For me personally, I know I can put money aside for taxes and insurances but not sure how many types of taxes I will have to pay (I am thinking of buying in East Rockaway/Valley Stream Village). Do you have to make separate payments to village, school taxes, town taxes?
Thanks for your insights?
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Old 02-20-2018, 09:29 PM
 
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I didn't escrow my mortgage, in Nassau you pay 4x a year 2 school and 2 general, all payments go to your township tax assessor. Not sure how the village works. I felt it made no sense to escrow 8k when I can put money aside for taxes and pay my insurance in full once a year. I did find lenders weren't a fan of this, we put 40% down and they allowed due to the large down payment. My lender took $700 of my $1200 lender credit way for not escrowing.
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Old 02-20-2018, 09:33 PM
 
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I am also thinking it makes no sense to put money in an escrow account when I can pay the property taxes and home insurance by myself. But need to know how much of a hassle/inconvenience it would be to do this? If you pay School and general quarterly, Village must be the same. So that makes it three payments each quarter?

Can you pay online?
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Old 02-20-2018, 10:22 PM
 
741 posts, read 484,517 times
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You make 1 payment a quarter
Jan 1 due feb 10 general
April 1 due may 10 school
July 1 due aug 10 general
Sept 1 due oct 10 school.

Each township is different. There is a $2 fee to pay online online in my township. It's no big deal I just mail a check at this point. If your bank allows it don't escrow. I took the escrow $$ I would of used and invested it.
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Old 02-21-2018, 05:04 AM
 
Location: Where my bills arrive
7,175 posts, read 8,769,298 times
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Quote:
Originally Posted by sLiKk View Post
First time home buyer here. Is it better to have an escrow account for property taxes and home insurance with the lender or pay these taxes and home insurance by yourself. I am a first time homebuyer so not very knowledgeable at this. I know , typically, if your loan-to-value ratio is below 80% lenders will allow you to avoid escrow account. But what are the pros and cons. For me personally, I know I can put money aside for taxes and insurances but not sure how many types of taxes I will have to pay (I am thinking of buying in East Rockaway/Valley Stream Village). Do you have to make separate payments to village, school taxes, town taxes?
Thanks for your insights?
I would escrow it; this way you don't have to keep track of paying, adjustments are made should the taxes go up. The loss of potential interest is negligible and for what they charge in interest for the loan I consider it a service they can provide me. I was never aware you could wave them fulfilling this role but I have always had VA loans.

Why do you not want them maintaining the escrow account?
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Old 02-21-2018, 05:35 AM
 
43 posts, read 134,500 times
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Quote:
Originally Posted by gx89 View Post
You make 1 payment a quarter
Jan 1 due feb 10 general
April 1 due may 10 school
July 1 due aug 10 general
Sept 1 due oct 10 school.

Each township is different. There is a $2 fee to pay online online in my township. It's no big deal I just mail a check at this point. If your bank allows it don't escrow. I took the escrow $$ I would of used and invested it.
This doesn't seem like a hassle.
Quote:
Originally Posted by VA Yankee View Post
I would escrow it; this way you don't have to keep track of paying, adjustments are made should the taxes go up. The loss of potential interest is negligible and for what they charge in interest for the loan I consider it a service they can provide me. I was never aware you could wave them fulfilling this role but I have always had VA loans.

Why do you not want them maintaining the escrow account?
I dont have to give them 6 months of taxes+insurance @ closing and can use it for whatever needs I may have. From what I am reading, it doesn't sound like a big hassle to pay the taxes on your own so I am leaning towards not escrowing it. Looks like lenders doesnt like when you dont get an escrow account with them.
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Old 02-21-2018, 05:59 AM
 
4,293 posts, read 6,406,285 times
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Comes down to the basic idea of, can you budget your own money?

If you can budget, then there's no sense in tying up money in an escrow account (when I've been forced into it, it's typically kept at about 150% of what the Actual costs are). It also makes it a PITA if you want to shop for different insurance, which is smart money. The reason is that you'll have to pay that New insurance from your own pocket, then try to get the escrow holder to make the change for you. I'm not sure I've ever seen a refund of the escrow account in these cases either, but it might have been that we simply turned down the option (it's been a long time since I had an escrow).

Look at it like this... do you utilize "Budget Billing" with your power company (where they average your costs so you have the same bill every month, but pay a little more overall)? If yes, then you may want to consider an Escrow. If no then you may want to consider skipping it.

It really is 100% about how you, an individual, manage your money.
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Old 02-21-2018, 06:42 AM
 
Location: In the basket
9,587 posts, read 11,183,000 times
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I thought the lender had the final say.
Escrow or no loan.
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Old 02-21-2018, 07:20 AM
 
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Quote:
Originally Posted by hotkarl View Post
I thought the lender had the final say.
Escrow or no loan.

Buyer has the final say as you can say lender or no lender. If one lender says no tell them there are plenty of banks out there.

Although you typically have to put at least 20-25% down for a lender to even consider not escrow.
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Old 02-21-2018, 07:33 AM
 
Location: Former LI'er Now a Rehoboth Beach Bunny
7,248 posts, read 9,607,765 times
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Just be aware that you really can't "budget" per se. We had our lender holding escrow and every year we came up short and it was essentially a demand for the balance due. This is a result of the irregular "year" for school vs. general taxes. The budgets are approved in May and the school taxes due 10/1 as opposed to the general which are on a calendar year basis. We finally decided to simply pay our taxes ourselves and based upon what the increase was in the budget vote in May we upped our budget for the tax payment and added a little buffer in for the general taxes. As was previously stated your lender may require the escrow.
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