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To Escrow or Not to Escrow?

If you have a mortgage, you've probably heard the term escrow. Escrow is simply the monthly payment to the bank to pay your house taxes and insurance at a later date when they come due. This amount is added on top of the principal and interest payment you make to cover your loan amount and will likely require a "cushion" or escrow deposit at your closing.

So should you do it? It depends. If your bank charges a fee, absolutely not. If not, it's your call.

If you are really good at managing your money, you can place the money in a savings account monthly which earns you interest and then you pay the taxes and insurance when they are due. This works well for those who really like their house payment staying consistent, like earning interest, and can budget well.

If you aren't great at disciplined saving, an escrow account requires you to pay that money to the bank each month and they take care of those bills when it's time. However, this can cause your house payment to fluctuate and adds an extra step if you decide to change homeowner's insurance companies.

So should you escrow? If there's no fee involved, it's truly up to you. Consult a trusted mortgage professional and allow them to present the details to you so you can make an informed decision.
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