Escrow question, would you keep the money for now?

[jlt19]

We get an escrow statement every March where it readjusts our payment. Our house insurance is due May 1 of every year. Mortgage company paid around mid April, but we actually switched insurance as of May 1, so they then paid that too. We received the full refund from the old insurance and only a letter from the mortgage company that since escrow is now negative, we could owe a lot once the escrow statement comes out, next March.

We're sort of thinking of moving, and in a month or so, with our payments, escrow will be in the black again, just not as much as they like to have obviously. 

I'm very disciplined and won't spend the money, but sort of think it may just be better/easier to hold onto it in case we do move, since we wouldn't owe it back then, but would owe it to the new mortgage, and just keep it in savings, even if I'm only getting whatever tiny % they're paying these days. 
WWYD?

[icedcoffee]

This has happened to me before. And also it just happened again last month. I paid the refund back into escrow. If you don't then you'll get a letter from the mortgage company saying they are going to increase your monthly payment for the difference so that they're not short for the next payments due.

Either way is fine, but I'd prefer not to increase my monthly payment.

[Susie]

Option 3:  can you just drop escrowing and streamline everything that way?  It is so much easier than thinking about all the calculations, changes, etc.

[ohgillian]

Jun 7, 2021 9:34:20 GMT -5 Susie said:

Option 3:  can you just drop escrowing and streamline everything that way?  It is so much easier than thinking about all the calculations, changes, etc.

Yes. I just dropped escrow with my last refi and I'm so glad I did. It turned out not to be complicated; I have to pay property taxes once a year and insurance once a year. They weren't doing anything magical for me that I can't do. 

[k3am]

Jun 7, 2021 9:34:20 GMT -5 Susie said:

Option 3:  can you just drop escrowing and streamline everything that way?  It is so much easier than thinking about all the calculations, changes, etc.

My favorite option. If you're disciplined not to spend the money, you're likely disciplined to manage the property and insurance taxes on your own. 

But it may not be possible without a refi. We tried to drop escrow on our loan after the mortgage company (THE WORLD'S WORST MORTGAGE COMPANY EVER, SHELLPOINT MORTGAGE) screwed it up in so many different ways and they refused to release the requirement. We ended up refi'ing to get away from them and to remove the escrow. We also made sure when we refinanced to go with a company that was unlikely to sell our loan so we wouldn't end up with that company again. 

[mlkgls]

I would probably give it back to avoid raising the monthly mortgage amount, but if you have the option I’m another vote for dropping escrow. My last mortgage company was terrible at estimating the yearly increases; the amount swung back and forth like a pendulum so I’d absolutely had it when I refi’d last fall. I simply transfer the equivalent amount into savings each month and it couldn’t be easier.

[plutosmoon]

I always just let my payment increase for any escrow shortage, so I'd keep the money and let them increase my payment next year. My escrow analysis was always awful, one year they sent me a check for overage and increased my payment, I didn't understand that one. My mortgage companies never allowed me to drop escrow, although my last house didn't escrow my insurance, just taxes. If dropping is an option, I'd do that.

[melmel48]

Jun 7, 2021 8:13:24 GMT -5 icedcoffee said:

This has happened to me before. And also it just happened again last month. I paid the refund back into escrow. If you don't then you'll get a letter from the mortgage company saying they are going to increase your monthly payment for the difference so that they're not short for the next payments due.

Either way is fine, but I'd prefer not to increase my monthly payment.

Yes, this is what happened to me. I just paid it back to the escrow so my monthly payment did not increase. 

[jlt19]

I'd love to get rid of escrow all together, but this was an FHA loan 10 years ago, so I doubt I can. At least I don't have PMI anymore!

If we move, we'll do conventional with 20% down, so hopefully we can get out of escrow too. I honestly didn't know that was a thing until recently. I guess I just always assumed you HAD to do it while carrying a mortgage so the bank makes sure you stayed insured/pay your taxes.

[k3am]

If I recall correctly, FHA loans require the escrow account. If you’re stuck with it, I’d just lump sum it back to them so your payment amount stays the same.