Escrows – pay with mortgage or use to save interest?

Escrows – Pay With Mortgage or Use To Save Interest?

Why do a lot of lenders not give mortgages unless you pay them escrows with the monthly payment?  They will not even give you an option. Because they make good use of your money while it is waiting for tax time. There are some lenders however who will give you an option, and if they do, you would be wise to say ‘no thank you to paying escrows, I’ll pay my own taxes’, and here is why. #1 – Taxes are due twice a year, so if you are paying the bank/lender a portion every month, what are they doing with that money? Of course they are investing it and earning themselves some nice interest. They are most likely lending it to someone else. Maybe you are the someone else? #2 – Let us look at how that escrow payment money could be working for you instead of working for the lender. In this scenario let us assume you have some type of line of credit, like a Home Equity Line of Credit or a Personal Line of Credit. Let us also assume you have a balance owing on that line of credit. Because you are charged interest on the average daily balance of your line of credit,  wouldn’t it make sense to try to keep that balance as low as possible for as many days as possible each month? How can you do that when you have no extra money? Here is one possible way. Call your bank/lender and say I want to pay my own taxes each year so I am not going to send you escrows with each of my monthly mortgage payments.  Now some lenders will allow this and some will not, but if they do here is what you do next. Every month, you deposit that escrow payment to your line of credit, reducing the balance and therefore lowering the amount of interest charges you will have to pay each month. This way you are saving up the tax money so it will be available to you when the bill is due but in the mean-time your money is working at saving you interest charges rather than earning interest for the lender. #3 – If you do not owe any money besides your mortgage, then you can put the monthly escrow payment into a savings account and be earning yourself interest on it rather than giving it to the bank in which case they are the only one’s earning interest on your money. #4 – There are many other choices you can make that will benefit you even more than these two examples. See what one client did below. #5 – A Real Client Testimonial who decided to cancel their escrow account with their bank and have the our software determine the best use of that escrow money for them. ” Just wanted to thank you for the advice you gave me of letting your system handle the paying of my real estate taxes by removing the escrow payment from my mortgage. Here are the results: “Before my mortgage payment was 526.91 with an escrow payment of 372.04 for a total payment of 898.95. At that point I had 5.75 years left to pay off my mortgage. I removed the escrow payment and now have the your software handling my tax payment by adding a $2200.00 yearly expense for taxes like you told me. By just doing this, my years left went down to 4.8 years! So I knocked 9 months off by doing basically nothing and just letting your  system manage my real estate taxes. I can’t even begin to imagine how much interest on my mortgage that is going to save me. This system is definitely worth every penny.” From Peter C’s brother There are so many different ways of moving our money and little scenarios that can make a huge impact on how fast we pay off our debts and build wealth for ourselves. Our system is designed to coach and educate each user so they can make the best use of their hard earned dollars. What did our system tell Peter C’s brother to do with his escrow money to have such an impact? Probably something different to what it would tell you to do with yours. Find out by asking me for your customized, free analysis. It’s really impossible to determine on our own what all these scenerios are, and the effect that they could be having without a real tool.  Our financial financial navigation solution software coaching and education system is that tool and it is worth every penny you pay for it.
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March 7, 2009 · Jennifer · 2 Comments
Tags: , , , , , , , ,  · Posted in: Escrows - Pay with mortgage or not?, TAXES

2 Responses

  1. James Oates - March 8, 2009

    Hi Jennifer, great story, thanks for sharing…

    Warmly,

    Jim
    http://www.JamesOatesIII.com

  2. Phil Bolsta - March 19, 2009

    Thank you for the work you are doing in the world, Jennifer. I know that you are helping many people.

    Phil Bolsta
    bolstablog.com
    Author of “Sixty Seconds: One Moment Changes Everything” (www.sixtysecondsbook.com)

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