When I make my mortgage payment each month, part of the payment is for my escrow account. An escrow account is an account you pay into each month along with your mortgage payment to handle payments for property taxes and insurance. You earn no interest on this money but I'm sure the bank makes a little money off of it. The bank usually reviews the escrow account once a year to determine if they are taking too much money or not taking enough.

I logged into my mortgage account today to make sure all of my taxes had been paid for 2007 and realized my escrow balance is alot higher than it should be. The balance of the account right now is $1114.00!!!
I currently pay $289/month into my escrow account which is equal to $3468 after 12 months. Last year, my property taxes were $2354.

What if I handled my own escrow account??

  • I would make about $71 in interest. Depositing $217 a month into a savings account paying 5.05% (E*Trade) would yield $2675. ($2604 in contributions and $71 interest)
  • I would have an additional $72 each month to add to my freedom accounts or towards my car loan.
  • By handling my own escrow account, I would have an additional $935.00 a year to save or invest. ($72/month savings and $71 interest)
I've sent an email to my SunTrust Mortgage to see what is required to cancel my escrow account. Has anyone been successful getting your escrow account deleted with SunTrust Mortgage? What did you have to do?
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7 comments

  1. Jonathan // January 8, 2008 at 4:33 PM  

    Sounds like a good idea, but your logic is slightly flawed. While you are overpaying the escrow account, the money is still yours. You can request an audit and get the excess paid back for your freedom account. You are right, you will get an extra $71 per year, but that is the price to pay to have the mortgage company handle the payment of the property taxes for you. You wouldn't want to miss the payment to the county as it only comes twice a year.

  2. Anonymous // January 8, 2008 at 4:47 PM  

    I just did the same thing a few days ago. Can't believe I didn't think of it before.

    Details

  3. RacerX // January 8, 2008 at 10:09 PM  

    We do our own. We pay our Property taxes when they come and pay the insurance monthly. We pay exactly what is needed and no more then. A bit more on me to make sure that we save the property taxe amount, but I get interest on it. Wotrth it to me, not too crazy.

  4. SingleGuyMoney // January 9, 2008 at 7:07 AM  

    *jonathan: My property taxes are due once a year. They send the bill in August and they are due Dec 1st.

    *racerx: Did you request to handle your own escrow account when you initially took the loan?

  5. Tiki // January 9, 2008 at 3:49 PM  

    With our old mortgage, we paid our own, but when we refi'd, they gave us a slight break on the interest rate to have them handle the property taxes and insurance. So, for us, it was a good idea. And frankly, it's nice not to have to write that property tax check twice a year.

  6. SingleGuyMoney // January 9, 2008 at 8:02 PM  

    *tiki: My property taxes are due once a year.

  7. Anonymous // March 31, 2009 at 10:00 AM  

    We wish to pay our own escrow, but were told by our mortgage company that we would have to pay them a fee of $900 in order for them to allow us to do this. I thought we had the right to pay our taxes and insurance directly without penalty. Does anyone know about the legality of this?