Escrow Increase: Pay in full or over course of year

[Bullitt]

We were notified we have an escrow shortage (mortgage company requires a large buffer) and we can pay the shortage in full or over 12 months. In the past when this has happened, we've paid it upfront some years and we've averaged it out others. Some years we get money back. Much of it depends on tax increases and dates of payment.

I'm sure it's six to one, half a dozen to the other, but I'm thinking this time we're just going to add the extra payment to the monthly escrow payment even though we could pay the shortfall tomorrow. Averaging it out over 12 months is interest free since it's only escrow. We're not losing any money by averaging it out and it's also not a big hit to our account up front.

Any thoughts appreciated.

 

[weatherweenie]

The wife doesn't have us escrow anything. Doesn't want to give the bank access to our money. Personal preference.

We were notified we have an escrow shortage (mortgage company requires a large buffer) and we can pay the shortage in full or over 12 months. In the past when this has happened, we've paid it upfront some years and we've averaged it out others. Some years we get money back. Much of it depends on tax increases and dates of payment.

I'm sure it's six to one, half a dozen to the other, but I'm thinking this time we're just going to add the extra payment to the monthly escrow payment even though we could pay the shortfall tomorrow. Averaging it out over 12 months is interest free since it's only escrow. We're not losing any money by averaging it out and it's also not a big hit to our account up front.

Any thoughts appreciated.

 

[nasa1974]

We were notified we have an escrow shortage (mortgage company requires a large buffer) and we can pay the shortage in full or over 12 months. In the past when this has happened, we've paid it upfront some years and we've averaged it out others. Some years we get money back. Much of it depends on tax increases and dates of payment.

I'm sure it's six to one, half a dozen to the other, but I'm thinking this time we're just going to add the extra payment to the monthly escrow payment even though we could pay the shortfall tomorrow. Averaging it out over 12 months is interest free since it's only escrow. We're not losing any money by averaging it out and it's also not a big hit to our account up front.

Any thoughts appreciated.

If it's not a large amount (less than $500) I would pay it up front.

 

[Bullitt]

The wife doesn't have us escrow anything.

Our house will be paid off before you retire in 2023. Once that happens, the escrow account will be gone too. I don't think these accounts are a bad thing. It does pay interest, but in a zero interest rate world, it's not a deal maker.

If it's not a large amount (less than $500) I would pay it up front.

About $280 more than that.

 

[bmneveu]

Interesting discussion. I'm in the same boat, though my escrow increase was much more. Reason is property taxes shot up. Right now we are paying the installments just because that is the default option.

 

[Bullitt]

We're probably just going to average it in this time.

I looked back and there were some years we had increases and others got money back. I understand where they are coming from in having a buffer since insurance and taxes inevitably rise, but I think a $1300 buffer is high (Wells Fargo).