Daniel Z
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Your mortgage company can require you to make extra payments to boost your escrow balance and they may not pay you interest on the balance. |
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Brand X
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The issue is whether you forget to save for that one big bill which is a bad thing vs what you can do with the money during the year before that bill is due. I'm not sure if the escrow earns interest or not. If not, then there's another reason to pay it yourself. Lenders like it when you escrow because there won't be any tax lien affecting the value of the security for the money they lent you. |
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ed
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Are you frugal enough to "save those taxes monthly" in order to pay them on time, with no late penalties?
That's all you have to do.
Otherwise pay the morgtage company monthly. |
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jlee1224
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It's easier if you go through the mortgage lender (in escrow). So you only have one monthly payment for both.
There's really no real reason to go with either one. So go with the easy method. |
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No one
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I always paid my taxes through the mortgage lender. That way, I never had to worry when the time came to pay the taxes. The money was there. In addition, the mortgage holder may well pay you interest on the money they hold in escrow for you. You win both ways then: taxes paid on time with no worry and a few bucks of interest to boot.
God luck!! |
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HoneySuite
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I paid thru the lender and did not miss the extra bill!!!
Real Estate taxes are usually paid quarterly or semi-annually and can present a intermittent burden. Your lender will collect the funds to pay the taxes on a monthly basis from your payments and keep the funds in escrow on which you earn interest, so there really is no down side to having the lender do it. You may have to make a small adjustment payment to the lender at the end of the year if your taxes fluctuate or the adjustment can be spread among the next year's monthly payments. Your monthly payment can even go down if you end up with a positive balance in escrow.
Save yourself the headache of remembering another bill. |
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Nick C
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I like to have my money and not have someone else hold it for me. If the mortgage doesn't require it, I'd choose not to escrow for taxes. |
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aka Astra
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it depends upon your ability to control your spending/savings. If you are a good saver, then just budget the total amount and pay at the end of the year so that you can earn interest on the savings. If you are not good at saving & worry that come each January you won't be able to come up with the several thousands of property tax, then pay monthly through the lender and it won't hurt so much come tax time.
Also if you are close to the standard deduction on your return each year, you could bundle your deductions every other year to save a little income taxes. You would have to pay the taxes on your own to utilize this method.
To bundle, you would pay your property taxes in January year 1 and December year 1. (Additionally, make your January year 2 mortgage payment in December year 1). You will itemize in Year 1 on your 1040 (which would be 2 years worth of RE taxes and 13 months of mortgage interest). Then you wouldn't pay any property taxes in year 2 and just take the standard deduction. Again year 3 would be a repeat of year 1 and so on.
This bundeling only saves you money if you are near the standard deduction amount when you itemize. You should seek a tax professionals assistance on this for further guidance.
Otherwise, there is no good reason to choose one method over the other. |
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bigbadwolf
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If your not good as saving, you might want to think of paying it with your mortgage (monthly payments). Paying it on your own usually requires a one time, or twice a yr lump sum. |
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