See comments above. I will say "thanks" to you for mentioning credit card payments for insurance. State Farm didn't allow it last time I checked, but now it turns out I can do that - you saved me money - THANKS!62strat said:Correct, because I thought the point of escrow was to not have to worry about it; that they are competent and can figure it out and let me know when I need to pay more.aggiebq03+ said:
Don't go and do what you did before when escrowing, and have no idea at all what your property taxes and home insurance actually cost. Because this time you won't have the bank escrow department to front the money and then ask you to pay them back interest free, you'll need to borrow the money.
You were mad at the bank and escrowing, but the real problem was you didn't pay attention and know how much should have been going into escrow to begin with.
As long as you fixed the real problem, going without escrow is the right decision. And putting the money you need to pay in a money market or HYSA to get a little interest means you'll be a marginal amount ahead vs an interest free load to the bank for having them do a little math and write some checks on your behalf.
Well they aren't and they can't.
Instead, they just fronted me money, and then, without raising my payment, took some of my normal payment to pay themselves back. So not only was my payment short for the increases, they were also taking some off the top to pay themselves back.. so fast forward 12 months, now I'm really short, and it goes up $500/month.
They aren't just fronting money, they also wanted a $2k pad, probably because they f-ed it up in the first place and had to front me.
- It's formulaic, bro - - they are required by regulations to do it the way they did it. No one screwed up here (you or "them"), it just happens when taxes and insurance rates escalate quickly
I am more than capable of paying my tax bill. Even if I'm $1k short (It's only $6k to begin with), that isn't that big of a deal. I don't need to 'borrow money' for a few thousand bucks.
- In effect, it's an interest free loan they were giving you. You got mad, and cheated yourself out of a 0% interest loan. Ideally, you would discontinue escrow AFTER you finished receiving this unforeseen benefit in a year or so. Not a big deal (maybe a hundred of so of lost money-market interest?), and it's better escrowing yourself, so you're in the right spot going forward.
My insurance is paid month to month now (it was paid in full in escrow), and it's direct billed from USAA, so I will never be short there. Auto charge on credit card.
- Incidentally, you're actually probably cheating yourself just a little bit here, too. Check with USAA and see what the semi-annual or annual insurance cost is. Do the math. With State Farm, it's several dollars a month for the privilege of paying monthly.