Improve Your Monthly Expenses by Saying Goodbye to Escrow Payments

Photo by Ken Teegardin (Flickr)Purchasing a new home almost always comes with a new mortgage. A mortgage often comes with escrow payments that get added onto your bill every month, which then sit in an account from which your taxes and insurance are paid.

The problem with escrow payments is that you don't get a say in how much money goes in every month - your lender makes that determination, and often that means giving them a free loan of your money.

There is a way to pay for these expenses yourself, especially if you already have a pre-established history with your bank.

Here is what Lifehacker recently featured on their blog, suggested by Eyes on the Dollar.

It is really as simple as a phone call to your bank, If you can show them that you aren't a risk and pay your bills, they will likely remove the escrow payments. Here's what Eyes on the Dollar did:

"Last month, the same thing [a hidden escrow payment increase] happened with our rental property, but I won't fall into the trap again. I cancelled it. I thought it would be harder actually, but all it took was a phone call. It was so easy that I cancelled our home escrow account as well. Now, we can keep our own money and pay taxes and insurance ourselves.

This would never have worked in our over spending days, but we are certainly able to set aside money each month to cover these costs. While I don't expect to earn huge interest, at least we aren't giving our money to a big company to hold on to."

Note that you will have to create a budget to  pay these taxes and insurance once or twice a year. Despite this, this is now a great way that you won't overpay and you will get a refund at the end of the year.

Questions on how to put this into practice? Don't hesitate to send us an email or give us a call.

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