My mortgage breakdown (30 year fixed, mortgage calculator, loan, sales)
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Location: Lots of sun and palm trees with occasional hurricane :)
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Question about this escrow thing.
I did an escrow acct on this property because it lowered my mortgage interest to do it like that. I don't know if it still makes any difference whether to escrow or not (for the interest rate). I have plenty of equity in this house and it is a 30 yr conventional mortgage.
What would be the advantage in taking escrow off and just paying myself (assuming it doesn't change my rate which is 5.625).
Another question. If you pay down the principal by making the extra payments the first couple of years, and then don't pay anything extra for another couple of years, then start again, is it still helpful to pay the extra?
I did an escrow acct on this property because it lowered my mortgage interest to do it like that. I don't know if it still makes any difference whether to escrow or not (for the interest rate). I have plenty of equity in this house and it is a 30 yr conventional mortgage.
What would be the advantage in taking escrow off and just paying myself (assuming it doesn't change my rate which is 5.625).
Another question. If you pay down the principal by making the extra payments the first couple of years, and then don't pay anything extra for another couple of years, then start again, is it still helpful to pay the extra?
It is always helpful to make extra "principal" payments As far as the escrow account....you would have to contact the lender and request that your taxes and insurance no longer be impounded. The only advantage is that you can be in charge of the money....deciding how and when you want to pay the bills. You can use the money for other investments that could make more than whatever the loan companies rate is on the escrow account.
Location: Lots of sun and palm trees with occasional hurricane :)
8,293 posts, read 16,154,502 times
Reputation: 7018
Quote:
Originally Posted by martinez4
It is always helpful to make extra "principal" payments As far as the escrow account....you would have to contact the lender and request that your taxes and insurance no longer be impounded. The only advantage is that you can be in charge of the money....deciding how and when you want to pay the bills. You can use the money for other investments that could make more than whatever the loan companies rate is on the escrow account.
Hummmmm. Thanks. Yeah, I've always made extra principal payments. I hate this 30 yr thing but I wanted flexibility "just in case". Took 30 but meant to do only 20. Then homeowner's insurance in Florida went bonkers and there went any extra. This year I will be able to lower the HOI so $ back to principal.
I'll have to think about the escrow. I almost don't like to think that I have to save $ for taxes. There's a temptation to use it for some other big "emergency".
Hummmmm. Thanks. Yeah, I've always made extra principal payments. I hate this 30 yr thing but I wanted flexibility "just in case". Took 30 but meant to do only 20. Then homeowner's insurance in Florida went bonkers and there went any extra. This year I will be able to lower the HOI so $ back to principal.
I'll have to think about the escrow. I almost don't like to think that I have to save $ for taxes. There's a temptation to use it for some other big "emergency".
Even just a $50 or $100 a month can make a difference. As far as the escrow....it can be hard to set it aside and not use the money for other things......good luck to you
How can one tell if the bank is charging a percentage for the escrow handling fee? Would it be written anywhere on the mortgage stubs, or do I have to call them and ask?
Another question. If you pay down the principal by making the extra payments the first couple of years, and then don't pay anything extra for another couple of years, then start again, is it still helpful to pay the extra?
It's always helpful to make additional payments toward principal. It is *more* helpful, earlier, than later. For instance, paying an extra $100 this month has more effect than paying an extra $100 six months from now.
Hi vpcats,
For every $1 you pay in extra principle you will save many dollars in interest down the road. Daniel is correct telling you the sooner you can make the payments the better off you are, but even if you miss some in the beginning it will save you big $$$ to make any additional principle payments you can.
One thing we figured out real fast is that if the bank has a "pay every two week" program be skeptical. All they are doing is charging you a fee and it winds up with one extra payment a year.
Better to just have the discipline to pay extra principal on your own and stick with the original payment plan [plus adding principal]. We looked at refi at one point [loan was at 6.3%] and figured we could save more money doing that than refi [this was when the rates dropped below 5.5]
One thing we figured out real fast is that if the bank has a "pay every two week" program be skeptical. All they are doing is charging you a fee and it winds up with one extra payment a year.
Better to just have the discipline to pay extra principal on your own and stick with the original payment plan [plus adding principal]. We looked at refi at one point [loan was at 6.3%] and figured we could save more money doing that than refi [this was when the rates dropped below 5.5]
I have people calling me all the time requesting that bimonthly payment plan, and I explain to them how to accomplish the same thing with extra principal payments. These shyster companies send them junk mail trying to fool them into thinking they need to pay a middle man to get that done.
when i started in the rental business years ago i bought properties i could afford to make double payments on.
making double payments allows you to pay off in 5.9 years. saving thousands of dollars.
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As far as the escrow account....you would have to contact the lender and request that your taxes and insurance no longer be impounded. The only advantage is that you can be in charge of the money....deciding how and when you want to pay the bills. You can use the money for other investments that could make more than whatever the loan companies rate is on the escrow account.
