Escrow accounts once loan is paid off?

[ABNAK]

I hesitate to ask this, as inevitably someone is gonna ask "Why would you do that?"

Does anyone provide escrow alone accounts once a mortgage is paid off? Like I send Joe Blow's Escrow Service the money for my insurance and taxes each month (obviously for a small fee) and they are responsible for paying it yearly? i.e. I don't have to keep the $$$ separate each month from other bills?

[kerplode]

Why would you do that?

Seriously, though, I did that escrow thing once and it was a constant pain in the ass. The balances would get mixed up each time the loan was sold to a new servicer and the payments to the county and to my insurance company were constantly late. Pain in the ass. Next time around, I financed with a credit union and set it up with no escrow. I'm better at managing that stuff than they will ever be. Plus, do you want to risk losing your paid-off house to the county 'cause Joe Blow Escrow missed a payment and you didn't notice?

Naw, son...Have some discipline, put that cash in a separate account that you own, and pay the bills yourself.

But to answer your question, no, I don't know of a service that will do this. That doesn't mean there isn't one, though...

I bet you might be able to get some legit info from a title company in your area.

[Averageman]

Checked with your Bank yet?
Shouldn't be too hard to set up.

[kerplode]

Sorry, I realize the above was a bit harsh. I didn't mean to imply that you are not responsible, and people have different ways to manage their affairs than I do.

I wouldn't do what you're suggesting, but that doesn't mean it's a bad idea for you.

Anyway, I still think that a title company in your area might be able to help you figure this out. They're connected to lenders plus all sorts of services like this. Hell, one of them might even do it for you.

[ABNAK]

Sorry, I realize the above was a bit harsh. I didn't mean to imply that you are not responsible, and people have different ways to manage their affairs than I do.

I wouldn't do what you're suggesting, but that doesn't mean it's a bad idea for you.

Anyway, I still think that a title company in your area might be able to help you figure this out. They're connected to lenders plus all sorts of services like this. Hell, one of them might even do it for you.

lol No problemo man! It's all good!

[ABNAK]

Checked with your Bank yet?
Shouldn't be too hard to set up.

I have mine through Quicken [soon to be Rocket Mortgage] and they said they didn't do that. I'll check with my bank and see if they do.

[utahjeepr]

Set up a separate savings account and autopay from your checking/main account. Better yet, autopay your former mortgage into it in full, before you get used to "not" making that payment. Let that savings stack up for a while and invest it.

[el_chupo_]

So the only benefit to the escrow is the single payment for mortgage and they automate the outgoing payments for you. A bank account, brokerage account, credit union account, etc. with bill pay will do the same. Its not a bad idea, the underlying thought of separating funds into another account so you know it is covered - but IMO, its a bad idea to give up your own money to let someone else do it.

It will take you a bit to set up, and a year to get it all sorted like you want, but after just a few minutes a year to keep it running. Set up the account, auto-deduct from pay or transfer from main account to that monthly. Call your insurance up and set up your quarterly, semi annual, or annual payments, and give them the bank info to pull it from, and you are done there. For your property taxes, set a reminder on your phone for Dec 1 or 15 or something and pay that, and check at start of year or whatever to make sure your insurance rates didnt change much and adjust your cash movement from there.

From that point forward, its a 3-5 minute a year on the property tax bill, either sending payment or giving out payment info for them to pull, checking your insurance docs and amounts, and you are all set. plus you keep your funds for the time is not being paid out, gain your minimal interest, and have control over funds if anything happens. That may be as simple as adding $50 a month extra so in a few years your homeowners insurance deductible is in the bank and separate from other money, or whatever.

[Dukr]

I'd just leave the money in savings until you make your payments. I stopped my escrow about a year ago, and I paid my house off in December. My homeowners insurance went down a little since the house is paid for. I pay once a year in full, because then I get a discount, plus I use a credit card to get cash back. I go online twice a year and pay my property tax.

[OH58D]

Escrow accounts, also known as Impound accounts, have always been a racket that allows the mortgage company to earn interest on your money. However, they like to make sure the property taxes and insurance are paid on THEIR property until it's paid off.

For after the mortgage is paid off, County Property Tax is paid annually, many times allowed in two installments. Homeowners insurance is also an annual event. On a ranch, the tax works in a similar way, but the insurance is a commercial policy. I put the money in an interest bearing account, and pull it out once a year for the county and insurance company.

[pinzgauer]

I would set up a cash management account wherever you have your retirement iras, 401ks, etc. (Fidelity, Schwab, Merril, etc) They don't have the activity restrictions like a savings account at a retail bank will have. And because retirement accounts tend to be larger it puts you over any of the typical restrictions that they do have.

Then do a payroll deduction or whatever for the amount you would have normally put into escrow.

Better yet when you pay your loan off, do a payroll deduction for the amount of your house payment or at least 80% of it directly into that account. That way you kind of stay on the same spending footing as when you had your house payment.

I can have multiple payroll deductions, so I have one account that I use for property tax/ins like the old escrow account. And then another that as I paid off house / vehicles I just divert the equivalent pmt amount. That way the money just doesn't get sucked into household spending

[ABNAK]

Well once the mortgage is paid off and while we're still used to the $$$ going out each month we're gonna start the remodeling process: both bathrooms, kitchen, etc. That should just about get me to when I retire and then I'll have a paid-off house that is up to snuff so the loss of any income won't be felt.

[Arik]

This may sound crazy but what about credit card?!?!!! The payments are the same every month, they get taken out automatically and you just pay one bill at the end of the billing period. At the same time you earn points (if that matters to you). A guy I know does this. He puts everything on his cc. Car insurance, mortgage, school...etc.... And makes one payment at the end of the month. In the meantime he gets crazy points and his traveling (flight, rentals, hotels) is extremely cheap.

Or....you can set up your banking payment automatically once a month and done. I do that with car insurance. It never changes and the payments are automatic

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[ChattanoogaPhil]

We have a number of bank accounts and transfer money between them for various purposes. For the purposes you describe, you could simply set up a separate checking account, then set recurring monthly payments from your main checking account to it. Done.

If the issue is a matter of not being able to trust yourself or spouse to raid the funds for spending on something else, leaving you empty-handed at tax time, then you'd be better off with a third party escrow holding the money as you describe.

Access is the mother of temptation... I know this all too well when the wife fills the cookie jar. haha.

[Steve Shannon]

You can hire an accountant to set you up the way you want, taking care of all your bills and providing you with spending money.
However, you paying into an account monthly and then using that account to pay annual mortgage payments is not in your best interest. You’re better off not allowing mortgage interest to accumulate for the entire year. Look at your amortization schedule to see how quickly you can jump ahead on principal by simply paying a little more each month.