How long do I need to pay escrow on my mortgage?

Question

I've been paying for my house for about 10 years. Will have to pay escrow throughout the entire loan?

Answer 1

You have an escrow account set up to pay for the taxes and insurance, correct? If this is the case you will have to pay into the escrow account for the life of your loan unless you can get the mortgage company to agree to close the escrow account. I am in California and at least in this state you have a choice whether you will have an escrow account or not. But once you have one set up you are stuck unless the mortgage company will co-operate. I think the mortgage broker must get extra commission or something if you have an escrow account for the taxes and insurance because they seem to push it and sort of gloss over the part in closing where they are supposed to tell you you have a choice. I have had it both ways: a mortgage with an escrow account and one without it. Each way has its advantages. With the escrow account you don't have to worry about being late on the taxes or insurance, but on the other hand if you have the discipline to put aside money each month on your own for the taxes, etc., you can make more interest on it than the piddling 1% or 2% you make in the escrow account. The mortgage company makes more interest on the float of the money in the escrow account than you do, and that sort gripes me.

Answer 2

Yes, an escrow account with a lender is for the life of the loan. It's like a savings account that is set up by your lender to pay the property taxes and hazard insurance on your home. The only way to not have that escrow account is to refinance your loan and let your loan officer know you don't want the escrow "impounded". BUT, without an escrow account you will need to pay the taxes (every six months) directly to the tax assessor and you will have to pay your hazard insurance premium (usually once a year) directly to your insurance carrier. The escrow account actually makes it easier to pay these items because you don't have to come up with the entire amount every time it's due. You pay a little more on your monthly payment and the lender holds the funds and disburses them to the correct parties when due.

The mortgage company makes nothing off the escrow account - it's for paying the taxes and insurance. Interest is calculated on the principal balance of the loan ONLY.
In fact, you probably have a lower interest rate than you would have had if you didn't have the escrow account. It insures the lender that you stay current on your taxes and always have hazard insurance thus minimizing any future problems the lender may encounter after lending the money.

Answer 3

The papers you sign at closing will specify that and your loan officer will also know. Most of the time you do not pay a payment on the 1st of the next month but not until the 1st of the month following that. That is why at closing you pay a fee called pre paid interest. Most mortgage companies have you pay "interest in arrears" so that when you make your house payment you are paying interest on the loan for the whole entire month that just passed. At closing you would pay interest for the days left in the current month. It is possible to arrange it in a different way. If you close on the 2nd of the month you can often pay no prepaid interest and have your first payment be the 1st of the very next month instead. I would not suggest that- I think you get shorted a couple of bucks that way.

Answer 4

Uh, you do understand what the escrow payments are for? They are for the real estate taxes and insurance on your home. Most lenders require that it be paid through an escrow account for the length of the mortgage - check your loan agreement.

After the loan is paid off, you'll make the payments each year yourself directly to the taxing authority and to the insurance company.

Answer 5

What Is Escrow Payment

Answer 6

Interested in this

Answer 7

Maybe, but I'm not certain

Answer 8

This question is worth more attention