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05-04-2009, 12:15 PM
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Senior Member
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Join Date: Sep 2007
568 posts, read 376,004 times
Reputation: 123
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Do you use escrow account?
Escrow account is convenient but you are giving the servicer an interest free loan. So do you use it?
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05-04-2009, 12:22 PM
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Senior Member
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Join Date: Jun 2008
Location: Lemon Grove, CA USA
826 posts, read 370,467 times
Reputation: 530
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Yes I do though I still get hit with supplemental taxes, heh.
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05-04-2009, 08:07 PM
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Senior Member
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Join Date: Aug 2008
Location: Plano, Texas
675 posts, read 362,900 times
Reputation: 153
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No, i can manage my own funds and do not need the lender to handle that. There are only 2 reasons to set up escrow account. First, you want the convenience. It is very convenent just not the most prudent thing to do with your money. You can hold your own money and pay your own taxes and insurance or you can give your money to the lender to hold for you and let them pay. Second, your worried that you wont save the money each month and thus be unable to pay your taxes. If you are that person, than set up escrows for sure. the worst thing is around Christmas time you get a tax bill and dont have the funds to pay.
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05-04-2009, 11:52 PM
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Senior Member
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Join Date: Mar 2009
155 posts, read 81,408 times
Reputation: 66
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Is it true CA does not require escrow accounts? Do any underwriters require it to sign off on a loan?
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05-05-2009, 10:44 AM
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Taco-ness is next to Godliness.
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Join Date: Mar 2007
Location: Richardson, TX
2,906 posts, read 1,847,799 times
Reputation: 4133
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The bank is not allowed to make any money on escrow accounts, so it's not accurate to call it a loan.
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05-05-2009, 02:15 PM
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Senior Member
Status:
"Burr, cold!"
(set 11 days ago)
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Join Date: Mar 2008
Location: Alaska
1,927 posts, read 1,009,902 times
Reputation: 661
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I used to, but I stopped it a little over a year ago. The escrow analysis was going to increase the reserve when it should have gone down (I made an insurance change). I couldn't see giving them more money when I didn't need to. I think most loans get set up with an escrow account and borrowers don't realize they can cancel them. My lender required it only if you're paying PMI.
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05-05-2009, 08:20 PM
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Senior Member
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Join Date: Sep 2007
568 posts, read 376,004 times
Reputation: 123
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Quote:
Originally Posted by Debsi
The bank is not allowed to make any money on escrow accounts, so it's not accurate to call it a loan.
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1. Whether or not the bank makes money on escrow account does not change the fact that we are giving interest free loan to the bank. If we don't give the bank, we can earn interest instead.
2. Banks may not earn interest on it but it will free up their working capital, which is a big benefit to the bank. |
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05-07-2009, 02:54 AM
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Member
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Join Date: Jun 2008
12 posts, read 11,238 times
Reputation: 12
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I have escrow account for convenience only. Some banks will send supplemental tax on your behalf from the escrow account if you fax the bill to them.
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05-07-2009, 11:06 AM
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Senior Member
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Join Date: Sep 2007
568 posts, read 376,004 times
Reputation: 123
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I have called Countrywide to cancel the escrow account. They said that I qualify without any penalty. I'm trying to figure out how to do the journal entry on Quicken from now on.
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05-07-2009, 11:47 AM
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Mommy to a toddler and a preschooler.
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Join Date: Apr 2008
Location: Sacramento
1,775 posts, read 846,366 times
Reputation: 924
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Quote:
Originally Posted by glenn_1000
Is it true CA does not require escrow accounts? Do any underwriters require it to sign off on a loan?
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If your LTV is 80% or less you can not be required to escrow. |
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