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View Poll Results: Do you use escrow account?
Yes 22 55.00%
No 18 45.00%
Voters: 40. You may not vote on this poll

 
 
Old 05-04-2009, 11:15 AM
 
995 posts, read 3,677,068 times
Reputation: 360

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Escrow account is convenient but you are giving the servicer an interest free loan. So do you use it?
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Old 05-04-2009, 11:22 AM
 
Location: Lemon Grove, CA USA
1,055 posts, read 3,756,453 times
Reputation: 952
Yes I do though I still get hit with supplemental taxes, heh.
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Old 05-04-2009, 07:07 PM
 
Location: Plano, Texas
1,675 posts, read 6,617,607 times
Reputation: 693
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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Old 05-04-2009, 10:52 PM
 
220 posts, read 983,606 times
Reputation: 170
Is it true CA does not require escrow accounts? Do any underwriters require it to sign off on a loan?
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Old 05-05-2009, 09:44 AM
 
Location: Richardson, TX
11,715 posts, read 18,612,937 times
Reputation: 30359
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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Old 05-05-2009, 01:15 PM
 
Location: Alaska
5,356 posts, read 16,996,134 times
Reputation: 4045
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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Old 05-05-2009, 07:20 PM
 
995 posts, read 3,677,068 times
Reputation: 360
Quote:
Originally Posted by Debsi View Post
The bank is not allowed to make any money on escrow accounts, so it's not accurate to call it a loan.
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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Old 05-07-2009, 01:54 AM
 
12 posts, read 47,472 times
Reputation: 12
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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Old 05-07-2009, 10:06 AM
 
995 posts, read 3,677,068 times
Reputation: 360
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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Old 05-07-2009, 10:47 AM
 
Location: Sacramento
2,568 posts, read 6,191,477 times
Reputation: 1924
Quote:
Originally Posted by glenn_1000 View Post
Is it true CA does not require escrow accounts? Do any underwriters require it to sign off on a loan?
If your LTV is 80% or less you can not be required to escrow.
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