Canceling escrow account

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rashad3000
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Canceling escrow account

Post by rashad3000 » Thu Mar 21, 2019 8:33 am

Good morning. We put in a request with Bank of America to cancel our escrow account this morning. She said it should take 2 weeks to give a final approval. She also said she doesn't see any reason why it will not be approved. We have such high taxes in Texas, so I figured this money can make me more money throughout the year.

How many of you have a separate account for taxes and insurance? Do you just put this in one of the high yield online accounts?

Colorado13
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Re: Canceling escrow account

Post by Colorado13 » Thu Mar 21, 2019 9:07 am

I save my escrow money in my Ally account. I'm in a relatively low property tax state however, so this is a reasonable approach for me.

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Nate79
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Re: Canceling escrow account

Post by Nate79 » Thu Mar 21, 2019 9:26 am

Many states require that interest be paid (and even at a specific interest rate) on escrow accounts. Oregon was that way for us in the past and there was little to no gain by not using escrow.

sport
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Re: Canceling escrow account

Post by sport » Thu Mar 21, 2019 9:32 am

Before I retired, payday was twice a month. I added up all of my large bills that came once or twice a year, such as insurances and real estate taxes. I divided that total by 24 and put that amount into a Vanguard money market fund every payday. So, I was earning a decent yield on the money and when the bills arrived, the money was there waiting to be used. My retirement savings went into the 401k at work. The result was that whatever was in our checking account after the money market deposit was available for spending. I told DW that we could spend it on anything we wished, but we should not spend any more than that. It worked like clockwork for many years.

Topic Author
rashad3000
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Re: Canceling escrow account

Post by rashad3000 » Thu Mar 21, 2019 9:56 am

Thanks, everyone! I appreciate it.

frankandbeans
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Re: Canceling escrow account

Post by frankandbeans » Thu Mar 21, 2019 10:42 am

I put in this request with our two servicers, Chase and US Bank, about two weeks ago. Chase approved the request within three days. US Bank still hasn't responded.

No interest on escrow accounts here (VA). Will probably just keep needed pad for tax and insurance payments in high yield savings with rest of liquid funds.

Nearly A Moose
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Re: Canceling escrow account

Post by Nearly A Moose » Thu Mar 21, 2019 9:21 pm

Colorado13 wrote:
Thu Mar 21, 2019 9:07 am
I save my escrow money in my Ally account. I'm in a relatively low property tax state however, so this is a reasonable approach for me.
+1. Easy peesy, I get a bit of interest. That said, it's not crazy money. Our prop taxes are about $10k total, split into two payments. So if you very roughly figure the average balance in the "self escrow" account is $2500, we're making about $50 a year pre-tax. It's not in my view worth doing anything more complicated than putting this money into a savings account. In reality, the main reason I wanted to do this was so that I wouldn't have to deal with the bank miscalculating anything or changing the escrow amount (and thus the monthly mortgage payment) each year as my prop taxes change.
Pardon typos, I'm probably using my fat thumbs on a tiny phone.

dallasjava
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Re: Canceling escrow account

Post by dallasjava » Thu Mar 21, 2019 9:53 pm

I put my property tax money in a Fidelity money market fund. It's part of my monthly automatic transfer to them.

28fe6
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Re: Canceling escrow account

Post by 28fe6 » Thu Mar 21, 2019 11:03 pm

I always cancel escrow, because I want to time my tax payments to fall in certain tax years. The interest is a small bonus.

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fizxman
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Re: Canceling escrow account

Post by fizxman » Fri Mar 22, 2019 7:59 am

When I changed my homeowner's insurance, I called US Bank about the switch and about canceling my escrow. They told me there was a fee to cancel the escrow for the insurance and another for canceling the escrow for taxes. I said nevermind.

Is it common to charge a fee to cancel an escrow account? I don't remember what it was but I think it was over $100.

MikeG62
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Re: Canceling escrow account

Post by MikeG62 » Fri Mar 22, 2019 8:03 am

When I had a mortgage, I cancelled my escrow about a year into my last mortgage as the servicer (Wells Fargo) did a horrible job of managing the account. They had me paying way too much in way earlier than was necessary. I was concerned they might not let me cancel it (as they want to be sure you are maintaining your homeowners insurance and paying your taxes), but they agreed after I explained the reason was their mishandling of the escrow.
Real Knowledge Comes Only From Experience

frankandbeans
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Re: Canceling escrow account

Post by frankandbeans » Fri Mar 22, 2019 8:13 am

fizxman wrote:
Fri Mar 22, 2019 7:59 am
When I changed my homeowner's insurance, I called US Bank about the switch and about canceling my escrow. They told me there was a fee to cancel the escrow for the insurance and another for canceling the escrow for taxes. I said nevermind.

Is it common to charge a fee to cancel an escrow account? I don't remember what it was but I think it was over $100.
I did some searching around before submitting my request, and it seems like US Bank likes charging a fee, but many others do not. In my case, Chase did not. Still waiting on US Bank's response; will update with that data point when I have it.

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fizxman
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Re: Canceling escrow account

Post by fizxman » Fri Mar 22, 2019 8:24 am

frankandbeans wrote:
Fri Mar 22, 2019 8:13 am
fizxman wrote:
Fri Mar 22, 2019 7:59 am
When I changed my homeowner's insurance, I called US Bank about the switch and about canceling my escrow. They told me there was a fee to cancel the escrow for the insurance and another for canceling the escrow for taxes. I said nevermind.

Is it common to charge a fee to cancel an escrow account? I don't remember what it was but I think it was over $100.
I did some searching around before submitting my request, and it seems like US Bank likes charging a fee, but many others do not. In my case, Chase did not. Still waiting on US Bank's response; will update with that data point when I have it.
Awesome, thanks!

brokenrecord
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Re: Canceling escrow account

Post by brokenrecord » Fri Mar 22, 2019 8:34 am

Yes, high property taxes here in Texas. I cancelled escrow and put it all in Vanguard Prime Money Market. I’ll save into that account specifically for prop taxes on a monthly basis. The challenge is knowing how much of an increase you have to fight/save for each year. :oops:

28fe6
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Re: Canceling escrow account

Post by 28fe6 » Fri Mar 22, 2019 9:17 am

One year, I got a pink slip in the mail stating my taxes were overdue. My lender failed to pay my taxes, while holding onto my escrow. My taxes became late and I had to file for a hardship extension. I tried to involve state regulators but they eventually paid my taxes months late. Since then I always cancel my escrow and pay my own bills.

basspond
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Re: Canceling escrow account

Post by basspond » Fri Mar 22, 2019 9:57 am

When we did this years ago the taxing entities didn’t receive the memo so they kept sending the bills to the mortgage company. Luckily we knew when the bills were sent and corrected before they were late.

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djpeteski
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Re: Canceling escrow account

Post by djpeteski » Fri Mar 22, 2019 11:24 am

For others, you can simply not do escrow in the first place. When you apply for your mortgage you let them know that you will not be doing escrow.

sport
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Re: Canceling escrow account

Post by sport » Fri Mar 22, 2019 12:03 pm

djpeteski wrote:
Fri Mar 22, 2019 11:24 am
For others, you can simply not do escrow in the first place. When you apply for your mortgage you let them know that you will not be doing escrow.
We did this when we bought our houses. However, I believe that the down payment must be large enough for the bank to agree to this.

open_circuit
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Re: Canceling escrow account

Post by open_circuit » Fri Mar 22, 2019 12:43 pm

sport wrote:
Fri Mar 22, 2019 12:03 pm
djpeteski wrote:
Fri Mar 22, 2019 11:24 am
For others, you can simply not do escrow in the first place. When you apply for your mortgage you let them know that you will not be doing escrow.
We did this when we bought our houses. However, I believe that the down payment must be large enough for the bank to agree to this.
When I recently requested some refinance quotes, I found that some lenders were only offering the lowest rates and fees if you escrowed. Asking for a quote without escrow resulted in either additional fees or a higher rate in these cases.

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Socrates
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I never use an escrow account for any of my houses

Post by Socrates » Fri Mar 22, 2019 6:51 pm

I purchased......they would always overestimate and I just liked the ability to put it aside myself.
“Don't waste your time looking back. You're not going that way.” ― Ragnar Lothbrok.

JGoneRiding
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Re: Canceling escrow account

Post by JGoneRiding » Fri Mar 22, 2019 8:08 pm

sport wrote:
Fri Mar 22, 2019 12:03 pm
djpeteski wrote:
Fri Mar 22, 2019 11:24 am
For others, you can simply not do escrow in the first place. When you apply for your mortgage you let them know that you will not be doing escrow.
We did this when we bought our houses. However, I believe that the down payment must be large enough for the bank to agree to this.
I have also seen them charge a slightly higher int rate to NOT escrow (seems crazy as then they don't have to work about as much paperwork) that is the main reason I have allowed escrow.

nolesrule
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Re: Canceling escrow account

Post by nolesrule » Sat Mar 23, 2019 8:51 am

JGoneRiding wrote:
Fri Mar 22, 2019 8:08 pm
sport wrote:
Fri Mar 22, 2019 12:03 pm
djpeteski wrote:
Fri Mar 22, 2019 11:24 am
For others, you can simply not do escrow in the first place. When you apply for your mortgage you let them know that you will not be doing escrow.
We did this when we bought our houses. However, I believe that the down payment must be large enough for the bank to agree to this.
I have also seen them charge a slightly higher int rate to NOT escrow (seems crazy as then they don't have to work about as much paperwork) that is the main reason I have allowed escrow.
Probably because they are compensating themselves for the risk they take that you may not pay the taxes or insurance.

Gray
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Re: Canceling escrow account

Post by Gray » Sun Mar 24, 2019 8:40 pm

I told my lender (Navy Federal) I wanted to manage escrow and given our down payment (25%), income, and credit score, they didn’t raise an issue. I use Ally for property taxes, but USAA insurance is paid out of our bill paying checking.

Side note: I chose this lender because they hold their jumbo loans on their books and service them. I didn’t want to get passed around.

ETadvisor
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Re: Canceling escrow account

Post by ETadvisor » Sun Mar 24, 2019 9:48 pm

No Escrow. All my cash is in checking & savings at the same brick and mortar institution and EF is in HY savings account earning over 2%. I pay insurance from checking and much larger (relative to insurance payment) tax bill from the savings which I need to add money during the year. In essence the savings account is earmarked for the real estate tax bill. I could bypass the savings account and hold it all in EF for a couple extra 100 dollars of taxable interest as money is fungible but the mental accounting has me just holding it the savings account making pennies.

frankandbeans
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Re: Canceling escrow account

Post by frankandbeans » Fri Apr 05, 2019 1:31 pm

fizxman wrote:
Fri Mar 22, 2019 8:24 am
frankandbeans wrote:
Fri Mar 22, 2019 8:13 am
fizxman wrote:
Fri Mar 22, 2019 7:59 am
When I changed my homeowner's insurance, I called US Bank about the switch and about canceling my escrow. They told me there was a fee to cancel the escrow for the insurance and another for canceling the escrow for taxes. I said nevermind.

Is it common to charge a fee to cancel an escrow account? I don't remember what it was but I think it was over $100.
I did some searching around before submitting my request, and it seems like US Bank likes charging a fee, but many others do not. In my case, Chase did not. Still waiting on US Bank's response; will update with that data point when I have it.
Awesome, thanks!
Closing the loop here as promised. As I mentioned, Chase got back to me within two days of my request and approved escrow waiver with no charge. US Bank took a month and two requests before sending us a letter saying they would only approve it if we paid them a quarter of a point--$800 in our case. This is for a seven year old loan with a perfect payment record, and they still want exactly what they would've wanted up front for cancellation. Annoying.

quantAndHold
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Re: Canceling escrow account

Post by quantAndHold » Fri Apr 05, 2019 1:50 pm

nolesrule wrote:
Sat Mar 23, 2019 8:51 am
JGoneRiding wrote:
Fri Mar 22, 2019 8:08 pm
sport wrote:
Fri Mar 22, 2019 12:03 pm
djpeteski wrote:
Fri Mar 22, 2019 11:24 am
For others, you can simply not do escrow in the first place. When you apply for your mortgage you let them know that you will not be doing escrow.
We did this when we bought our houses. However, I believe that the down payment must be large enough for the bank to agree to this.
I have also seen them charge a slightly higher int rate to NOT escrow (seems crazy as then they don't have to work about as much paperwork) that is the main reason I have allowed escrow.
Probably because they are compensating themselves for the risk they take that you may not pay the taxes or insurance.
Also, in the states that don’t pay interest on the impound account, they get to hold the money and collect the interest themselves.

My experience was in Washington, where they don’t pay interest, I got a better interest rate by agreeing to an impound account. In California, where they do pay interest, as long as i put 20% down, they didn’t care either way whether or not I had an impound account, and there were no discounts for having one.

With the Washington house, I canceled the impound account when they didn’t bother to pay my homeowners insurance. I was making enough money at the time that I just cash flowed everything.

finsterfolly
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Re: Canceling escrow account

Post by finsterfolly » Thu Nov 07, 2019 4:41 pm

Thanks, for the info in this thread. I messaged Chase on Monday via my account login, and they reviewed my escrow status. They got back to me today (3 days) to tell me they are removing escrow from my account. Nice little bonus considering they require about a $1,500 minimum in my account.

sabhen
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Re: Canceling escrow account

Post by sabhen » Thu Nov 07, 2019 6:25 pm

This is a good thread. I am doing a refi with a different lender. My current escrow pays a 2% interest in CA. I like to keep using it for property taxes and insurance. My new lender does not offer an escrow account. Is this possible?

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