Escrow or Not?

I am sure many of you reading this blog are home owners like my husband and I.

In fact, this is our 2nd home. When my husband took a job in Cincinnati, we moved down here and had to sell our 1st home together and buy our current house.

The difference for us was that our mortgage with our 1st home did NOT require us to keep an escrow account. So, we didn't. We, of course, had heard of escrow accounts and knew many people had them. But when our bank gave us the option, we said, "No Thank You!"

Well, then we moved and shopped around for the lowest rate, of course. But low and behold, an escrow was required. Ugh! Nothing to be done, so for the last 6 years we have had our own money tied up in an escrow account while the bank makes money on our money.

In the last few months, our bank was taken over by another and our loan has now been moved over to a new banking establishment. Today they send me our Escrow Account Review and while looking over all the numbers I thought, "Does this bank require an escrow, too?"

I called.

If you meet certain criteria, you do NOT need to keep an escrow account. And, we met them! Yay!

So, what are my reasons for wanting to bypass the whole escrow account?

Each month, we pay over $400 in escrow. This money sets in an account the bank manages. Instead of sitting in my own interest bearing account where I earn money on my own balance, the bank instead earns. Why would I want that?

On top of that, the bank has kept almost a $2,000 balance in the escrow account during the year. They keep a "buffer" to make sure they can pay insurance and county taxes. That is extra money that is not even going towards those bills but they get to keep it and earn on it.

Now, we will be setting the money aside ourselves and pay our own bills. We earn interest and get to keep the extra buffer to use for other things or to just save.

Do you have an escrow account?

If so, do you believe you can ensure you will set your money aside to pay your insurance and taxes? If so, call your bank today and see if you can cash out your escrow and take care of your own bills. Start earning interest on your own money!

And, don't forget to read about the new High Interest Checking account I am using here. My escrow money will be now be going there to earn us a bit extra.



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