Just heard on the news last night that American Mortgage went bankrupt and all those who were paying into an escrow account lost all their money! Apparently, that money isn't insured so they all ended up having to pay taxes twice.
In today's market, it seems like this is a risk we all face. If it's not insured, what's the point of paying into an escrow account?
Why not just put that money aside on our own?
2007-09-12 03:59:42 · 4 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
You can. My wife and I do that right now. We are earning interest on the money as we speak. Finally, we are not paying a bank to keep our money safe. Ok, so we are paying a mutual fund to keep it safe for us, but we are earing interest on OUR money and not giving the interest to the bank.
2007-09-12 04:07:39 · answer #1 · answered by Mark S 6 · 0⤊ 0⤋
If your mortgage company will let you and if you have the discipline to put the money aside and to not spend it on anything else, then it's a great idea.
Many people do not have the discipline to save the money and to leave it for it's intended purpose. The mortgage holders want to be sure that the taxes are paid and insurance paid so the home can be mortgaged and no one else gets a lien on it.
2007-09-12 05:32:03 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Many people do pay taxes and property insurance on their own. However, many mortgage companies require taxes and insurance be paid thru an escrow account so that they know that these items are paid.
2007-09-12 04:07:36 · answer #3 · answered by bdancer222 7 · 0⤊ 0⤋
It is a way for the bank to make sure the taxes on the property are paid, and it is also a way for them to use your money to make money for themselves!
When you take out a mortgage, this is the time to question these practices.
2007-09-16 03:54:36 · answer #4 · answered by Maggie Jeans 3 · 0⤊ 0⤋