To Escrow Taxes & Insurance Or Not Escrow: That Is The Question?

Should you refinance your mortgage now?


Today’s interest rates are at unbelievable, all-time lows, so now is a very good time to consider refinancing your mortgage. If the rate you could get is at least 1% lower than your current rate, you should definitely take advantage. With rates as low as they are, you might think about changing to a 15-year loan, or if you’re five or six years into a 30-year loan, you could consider getting a 20-year mortgage.


Be sure to speak with your lender or the institution that holds your mortgage and ask them to run the numbers on what the difference in your monthly payments would be, as well as the difference in the interest you’d be paying with the different loan types. Once you see the potential reduction in interest payments, it might be just the incentive you need to go with a 15- or 20-year mortgage.


“Be educated about your options so you can make the best decision based on your circumstances.”


Also, most people don’t know that if you put down more than 20% on your home loan, then you don’t have to escrow your taxes and insurance—you could pay those bills yourself when they come out. Many people like to create their own accounts and pay it that way. One downside to that approach, however, is that you have to remember to set that money aside. Also, when you don’t escrow your taxes and insurance, the lender may actually charge you a fee for not escrowing—this is another reason to speak with your lender about running the numbers.


In the end, just be educated about your options so you can make the best decision based on your circumstances. If you have any questions about today’s topic or real estate in general, don’t hesitate to reach out to us. We’re always happy to help.