Pay taxes w/mortgage vs. pay taxes on your own?

**ml2620** · 04-09-2009, 09:40 AM

I just closed on the re-finance of our house!!!!! 5% fixed and I'm very happy about that. We will be paying for this place for a long, long time!

Of our new mortgage payment, $339.00 per month is taxes and $59.00 per month is homeowners insurance.

What is the more frugal option, making sure things are paid on time by having the mortgage company pay the insurance and the property taxes and not have to worry about it - or pay those bills ourselves to have more control of the money month to month(maybe collect interest on the tax money in our savings account or pay off the whole insurance payment at one time)

**tervsforme** · 04-09-2009, 10:01 AM

Personally, I pay my own taxes and insurance. I have a fixed amount automatically deposited into an investment account each payday. I much rather have the control myself. I have let the mortgage do it in the past, but if they estimate wrong, then you have to make up the difference.

**PrairieRose** · 04-09-2009, 10:03 AM

I think it's great to do it yourself but for most people I think it's a huge plus to let the mortgage company take care of it and not to ever have to worry about losing your home for getting behind on your property taxes. Jmho.

**Greebo** · 04-09-2009, 10:37 AM

Ultimately it makes little difference towards the actual cost. The mortgage company may collect a little too much for escrow, but they have to give it back in the end. Of course, for $300+ a month, if you could hold that and collect interest, the interest lost on the bank doing the escrow is a potential consideration.

**elphie** · 04-09-2009, 11:10 AM

When we financed our home we were young and not as responsible as we are now about saving. We opted for escrow for our taxes and homeowners insurance so we didn't have to worry about coming up with a large sum of money, especially the taxes since they are due in December. It was a good option for us at the time. If I were financing now I would not do this because we have substantial savings and therefore get a great interest rate so the money we lose is not insignificant. It isn't worth the cost of refinancing (unless interest rates continue to drop) so we just continue putting $ in escrow.

So, I guess it really depends on your personality and savings style. You need to honestly assess (you don't have to answer here but be honest with yourself) if you are a responsible saver and know the money will be there when you need it. If you answer yes, pay them yourself and earn interest on the money. If you answer no, put it in escrow and protect your home.

**Michelle** · 04-09-2009, 11:47 AM

We've always just had them come out with our mortgage. I don't even bat an eye when my tax bill comes in the mail because it's handled by the mortgage co., so there's no panic to try to find the money to pay it on time.

**kellieetter** · 04-09-2009, 12:07 PM

My mortgage company pays ours. And we know what we are paying because we still get bills for our insurance company. And our mortgage company always gives a check for what we over pay. It works for us!

**2ndGenGranola** · 04-09-2009, 12:28 PM

That is going to be up to you.

We had our last mortgage company mess up on our taxes and they were going to make up for THEIR mistake by doubling OUR monthly payment. Even if we paid that amount in full they were still going to double to "prevent" other situations like this - yea right.

We went to another company and took control of our tax payment ourself.

We have 2 checking accounts set up. Our "bill" account and out "normal" account. All auto payments are set up on the "bill" account. Extra is payed into this account so we can cover house taxes and such - there is no debit card or any fluff with that account.
Our "normal" account has the debit card and functions as a "normal" account.

If you trust your company, sit back and enjoy them paying for it.

We are a little gun shy now and prefer doing it ourselves.

**TigerGirl1226** · 04-09-2009, 12:32 PM

You have to be really honest with yourself, will you save the money to pay the taxes and insurance. Depending on when they are due, lump sum vs monthly payments will be a big factor. I know here if you pay the taxes late there are late fees and such so any money that you could have potentially earned on interested with the money being in the bank is negated.

For me, personally, I would love to have mine rolled into our mortgage. When we refied with WF a couple years back, they didn't offer paying the taxes and insurance with the mortgage.

**fixer** · 04-09-2009, 01:11 PM

The question comes down to two things.

Are you responsible enough to save the money and pay them yourself?

Do you trust someone else to make sure it is done on your behalf?

I have always done it myself. I don't like to depend on others to do things for me when it is not necessary.

**savvy_sniper** · 04-10-2009, 04:12 PM

It depends on how responsible you are. My husband's cousin puts $x in a savings account every month and when the taxes come due he pays them and has made a little interest along the way.

Hubby and I qualified for a grant because we were first time home buyers. Part of the deal was that the taxes had to be paid to the mortgage company and held in escrow and the mortgage company paid when the taxes were due. Considering that we got 100% financing and about $8,000 that we don't have to pay back (closing costs and downpayment) it was fine by us.

Mary

Since we didn't have 20% for a downpayment, we have private mortgage insurance included in our mortgage payment. We are paying extra every month and as soon as we have 20% paid toward the principle (or the house goes up in value a lot and we pay for an appraisal) we can drop the PMI.

I couldn't understand how my best friend's daughter and husband had such low mortgage payments for a BIG house. I came to find out that they were supposed to pay the property taxes themselves. So guess who ponied up $3,000+ for several years? Then they let the house be foreclosed.

Mary

**mom23boyz** · 04-11-2009, 03:22 PM

I had mine escrowed and will this time around as well. Just my preference then I know they are gonna be paid on time and I won't accidently forget or something.

[QUOTE=elphie;1155091] If I were financing now I would not do this because we have substantial savings and therefore get a great interest rate so the money we lose is not insignificant. It isn't worth the cost of refinancing (unless interest rates continue to drop) so we just continue putting $ in escrow.
[QUOTE]

Elphie
I wanted to tell you that you can probably cancel your escrow acct. I worked as CS rep for Countrywide and we canceled escrows and refunded balances all the time. If you just call your mortgage company they should be able to help you!! Just a thought.

**mom23boyz** · 04-11-2009, 03:23 PM

oops double posted!!

**Ladyfyre** · 04-13-2009, 09:13 PM

My taxes are paid by my bank. I pay an extra $200ish in addition to my mortgage. We did this so we wouldn't have to worry about coming up with the taxes. It is almost double what we have to pay them - they insisted on building up a reserve fund in our tax account. Last year we has an extra $2500 that we were able to take out of that account.

We still get the bills at home, just to let us know what the taxes are. I know some of the time the bank does not pay the taxes on time because we get arrears bills occasionally. This realyy makes us mad, because there are overdue fines.

If I did it again, I would pay the taxes myself.

**mom23boyz** · 04-14-2009, 09:33 AM

Originally Posted by Ladyfyre

We still get the bills at home, just to let us know what the taxes are. I know some of the time the bank does not pay the taxes on time because we get arrears bills occasionally. This realyy makes us mad, because there are overdue fines.

If the bank pays them late... the arrears are their responsibility not yours so they should NOT be coming out of your reserve!!