Should I Stop My Mortgage Escrow? By: Steve Johnson 6/4/2009 - 105 Comments Share Tweet Last month I got a letter from the bank holding my mortgage saying that I can discontinue my mortgage escrow account. Apparently there is a law in MN that says that after paying five years of a mortgage, the bank no longer has to manage an escrow account with a mortgage.  An escrow account is a pool of money collected with a monthly mortgage payment that is used by the bank holding the mortgage to pay the property taxes and homeowners’ insurance premium. An escrow account reduces the risk of a homeowner not paying their property taxes or homeowners insurance.  Most banks will give a lower interest rate to borrowers if they agree to an escrow account because it lowers their risk of foreclosure.  So, the question is should I cancel my escrow account or not?  Here are some of the advantages and disadvantage that I can think of. Advantages of Escrow The obvious advantage is that I only have to pay one bill each month and the bank takes care of saving some of the money each month in an escrow account and making sure my property taxes and homeowners insurance is paid.   Without an escrow, I will have to manage my cash flow so that I will have enough money to make my property tax and homeowners’ insurance payments twice a year when they are due - another bill to remember.  Disadvantages of Escrow An escrow account increases my monthly mortgage payments by $200-$300. The escrow money is put in an account with the bank and therefore I lose the opportunity to invest this money and earn any income with it.  This could also help pay off my mortgage sooner. An escrow account causes my monthly mortgage payment to change with my property taxes.  My mortgage payment is automatically withdrawn from by checking account, but I don’t like when it changes because I have to adjust by checkbook balancing with the new account.   Today, whenever my escrow account is underfunded or overfunded because of a change in property tax, the bank changes my monthly mortgage payment to increase or decrease the amount of money that is collected for my escrow account.  This is annoying to say the least.  If I were to pay my property taxes separate from the mortgage payment by cancelling my escrow, then my mortgage payments would no longer fluctuate.  What would you do? I am strongly considering cancelling my mortgage escrow primarily for the opportunity to invest this money and make an income before the money is needed. Related Articles How to Save Money by Cleaning Your House 7 Reasons to Grow Your Savings Account While You Are Still Employed 10 Reasons Why You Should Pay Off Your Mortgage Real Estate is No Longer An Investment, Get It Through Your Head Why Do We Need Savings?   Subscribe via RSS Copyright © 2017 PennyJobs.com. All rights reserved.

A Survival Guide For Selling A Home A Survival Guide for Selling a Home helps readers face the challenges of deciding whether or not to use an agent (and how to find one), estimating a price, and deciding which upgrades are worth making -- and which ones are not -- to add to their home's value. Featuring handy checklists, worksheets, and examples, the book takes readers step by step through the process of selling their homes, giving them valuable information on essential topics. Working From Home This is the altimate guide for how to start a home business. Full of ideas and tips. Working from home increases productivity by 15 to 20 percent. What better way to complete in the global economy. One great idea is to build a network of small home businesses with whom to trade services with. The Millionaire Next Door This book is a study of the America millionaires. The results tell that most millionaires are hard working people, as eighty percent of America's millionaires are first-generation rich. They became millionaires by budgeting and controlling expenses, and they maintain their affluent status the same way. The conclusion is that anyone can do it, with planning and determination. The Homeowners Guide to Renewable Energy The coming energy crisis caused by a peak in global oil and natural gas production will profoundly affect the lives of all North Americans. As the price of these vital fuels rises, homeowners will scramble to cut their fuel bills. Two options for meeting the upcoming challenge are dramatic improvements in home energy efficiency and efforts to tap into clean, affordable, renewable energy resources to heat and cool homes, to provide hot water and electricity, and even to cook. These measures can result in huge savings and a level of energy independence.