What To Consider Before Waiving Escrow
While an escrow waiver may sound enticing, there are drawbacks homeowners should consider first. Here are the biggest pros and cons of waiving escrow.
Pros
Most borrowers choose to waive their escrow accounts so they’ll have more control over their finances. Since you’re saving the funds yourself, you’ll have the ability to earn interest on anything you save. In comparison, you won’t earn any interest on the money in your escrow account.
Waiving your escrow requirements will also cause your monthly mortgage payments to decrease. And if you apply for an escrow waiver when buying a home, it can help you reduce your closing costs.
Cons
An escrow waiver could be the right choice for some borrowers. But you’ll be putting yourself in a difficult financial situation if you waive escrow and aren’t prepared to pay your property taxes and homeowners insurance annually.
If you’re considering an escrow waiver, it’s a good idea to review your property taxes first. And you should honestly consider whether you’re up to the task of managing the payments on your own. Most borrowers will find that it’s easier to let their lender manage their taxes and insurance for them.
