Homeowners and property tax question

• LJ

  

  thedynasty1998;886784 wrote:That's the obvious benefit of the bank, and I'm surprised every bank doesn't require it.

  Banks know that not everyone is lazy and will be swindled.
  

  Plus with how undisciplined most of our country is, it is best for all.

  Misnomer. A small percentage of Americans were extremely irresponsible. Most Americans are smart with their money.
• LJ

  

  WebFire;886782 wrote:Well, they have the cash you and don't.

  And I find another bank that doesn't require escrow. There are plenty that will make loans with no escrow, even the bigger banks.
• thedynasty1998

  

  LJ;886792 wrote:I choose not to escrow because I am concerned about my financial well being and take responsibility for it. I don't let some bank dictate it for me. The advantage is for no one but the bank. I think it's funny that now, not only is one of the advantages that you have one monthly payment (that may end up being short and have an accelerated repayment..... or may be too high, and well, we all know about the time value of money right?) and also that it is an advantage for the bank? Yeah, that is really an advantage for the consumer.
  
  Sorry that being more informed about personal financial responsibility makes me be "acting superior"

  We get that you are an elitist and smarter than everyone financially.
  
  So I am going to assume you never overpay in your income taxes? Never valet park? Don't shop at Nordstroms? Pay for newspaper delivery?
  
  Everyone chooses certain conveniences they are willing to pay for. Just because you choose not to escrow (which is really a free service) doesn't make you any smarter than someone who pays valet.
• thedynasty1998

  

  LJ;886800 wrote:And I find another bank that doesn't require escrow. There are plenty that will make loans with no escrow, even the bigger banks.

  I'm assuming you didn't pay any points or fees either huh?
• LJ

  

  thedynasty1998;886808 wrote:We get that you are an elitist and smarter than everyone financially.
  
  So I am going to assume you never overpay in your income taxes?

  Nope. Within $100 yearly. I pay attention and set everything as close as I can. No use in giving the government a free loan

  Never valet park?

  Only when required.

  Don't shop at Nordstroms?

  Never been in the store

  Pay for newspaper delivery?

  Nope it's all free online.
  

  Everyone chooses certain conveniences they are willing to pay for. Just because you choose not to escrow (which is really a free service) doesn't make you any smarter than someone who pays valet.

  But it does, because I am taking more responsibility and control over my finances rather than being lazy and letting someone else do it for me.

• LJ

  

  thedynasty1998;886810 wrote:I'm assuming you didn't pay any points or fees either huh?

  Regular closing costs. No points or fees otherwise. Damn me for being an astute mortgage shopper!!!!
• WebFire

  LJ;886792 wrote:I choose not to escrow because I am concerned about my financial well being and take responsibility for it. I don't let some bank dictate it for me. The advantage is for no one but the bank. I think it's funny that now, not only is one of the advantages that you have one monthly payment (that may end up being short and have an accelerated repayment..... or may be too high, and well, we all know about the time value of money right?) and also that it is an advantage for the bank? Yeah, that is really an advantage for the consumer.
  
  Sorry that being more informed about personal financial responsibility makes me be "acting superior"

  I think you look at it kind of odd though. The bank charges me interest too. Surely that isn't to my benefit is it? Do you expect the bank to not charge you interest then?
• LJ

  

  WebFire;886835 wrote:I think you look at it kind of odd though. The bank charges me interest too. Surely that isn't to my benefit is it? Do you expect the bank to not charge you interest then?

  But you have a choice to find a bank that will not escrow, you do not have a choice to get a loan that will not charge interest.
  
  How do I look at it odd? Escrow really picked up steam during the housing boom when they weren't requiring any income verification. It was a hedge for the bank on bad loans they were making. Not on normal loans.
• WebFire

  LJ;886837 wrote:But you have a choice to find a bank that will not escrow, you do not have a choice to get a loan that will not charge interest.
  
  How do I look at it odd? Escrow really picked up steam during the housing boom when they weren't requiring any income verification. It was a hedge for the bank on bad loans they were making. Not on normal loans.

  Unless you are taking the amount of your insurance and property tax and investing that amount before paying it, you aren't gaining anything financially.
  
  I'm sure you do though.
  
  Don't think it's as big of a deal as you make it.
• LJ

  

  WebFire;886844 wrote:Unless you are taking the amount of your insurance and property tax and investing that amount before paying it, you aren't gaining anything financially.
  
  I'm sure you do though.
  
  Don't think it's as big of a deal as you make it.

  I never made it a big deal. I just said it was worthless. Hell, even you have had problems with escrow. It's just not the financially sound choice, but it just shows how Americans are getting lazy these days and are pawns to the banks.
• WebFire

  LJ;886849 wrote:I never made it a big deal. I just said it was worthless. Hell, even you have had problems with escrow. It's just not the financially sound choice, but it just shows how Americans are getting lazy these days and are pawns to the banks.

  I'm not really sure it show laziness. The bank I went with gave me the best rate, but I had to escrow because I did FHA. I am pretty certain the money I save on the rate was greater than any money I "saved" no escrowing.
  
  So am I lazy or financially responsible.
• WebFire

  LJ;886849 wrote:I never made it a big deal. I just said it was worthless. Hell, even you have had problems with escrow. It's just not the financially sound choice, but it just shows how Americans are getting lazy these days and are pawns to the banks.

  I did have an issue, but my bank also worked with me to fix it. Figuring out the monthly amount isn't hard. It shouldn't real need adjusting.
  
  (Yearly tax + yearly insurance) / 12
• LJ

  

  WebFire;886852 wrote:I'm not really sure it show laziness. The bank I went with gave me the best rate, but I had to escrow because I did FHA. I am pretty certain the money I save on the rate was greater than any money I "saved" no escrowing.
  
  So am I lazy or financially responsible.

  Are you sure about that? Hell, if you had decent credit, right now you could get 4.5% from Chase, no escrow and 1% cash back.
• LJ

  

  WebFire;886856 wrote:I did have an issue, but my bank also worked with me to fix it. Figuring out the monthly amount isn't hard. It shouldn't real need adjusting.
  
  (Yearly tax + yearly insurance) / 12

  They will only adjust it when they get a bill. Your property taxes would then have a deficit of 6 months, plus you would then have to pay the extra amount going forward.
• thedynasty1998

  

  LJ;886849 wrote:I never made it a big deal. I just said it was worthless. Hell, even you have had problems with escrow. It's just not the financially sound choice, but it just shows how Americans are getting lazy these days and are pawns to the banks.

  You started the thread saying it's a fail to escrow. It's a service that doesn't cost anything. It is a convenience and can help budget. So the alternative is a savings account at .25%? I understand that is still something but you are talking about what, $20 a year in interest? I'll take the convenience all day.
  
  And how would it make a bad loan safer. If people can't pay they can't pay.
• LJ

  

  thedynasty1998;886866 wrote:You started the thread saying it's a fail to escrow. It's a service that doesn't cost anything. It is a convenience and can help budget. So the alternative is a savings account at .25%? I understand that is still something but you are talking about what, $20 a year in interest? I'll take the convenience all day.

  And liquidity, and not overpaying or underpaying. How can it help budget when you can budget better than the bank's twice per year review?
  

  And how would it make a bad loan safer. If people can't pay they can't pay.

  Because there is no chance the bank would lose the house to the counties.
• thedynasty1998

  

  It can help budget because you pay it monthly. You make it seem like the disadvantages of escrowing far outweigh the advantages and that's just not true. It's a free service for consumers that protect the banks.
  
  Now if you want to discuss the stupidity of a banks savings account that is worth discussing.
• LJ

  

  thedynasty1998;886881 wrote:It can help budget because you pay it monthly. You make it seem like the disadvantages of escrowing far outweigh the advantages and that's just not true. It's a free service for consumers that protect the banks.

  How do they not? All you have is convenience.... forget about the deficits that will highly impact a budget. Or the fact that you have to prepay to start with (not as HUGE of a deal on a purchase, but a pretty huge impact on a refinance, you have to pay 1 year of taxes, AND then pay monthly). Or the fact that you lose out on liquidity and interest.
  
  So pros
  1
  Cons
  3
  
  hmmmmmmmm
• thedynasty1998

  

  LJ;886887 wrote:How do they not? All you have is convenience.... forget about the deficits that will highly impact a budget. Or the fact that you have to prepay to start with (not as HUGE of a deal on a purchase, but a pretty huge impact on a refinance, you have to pay 1 year of taxes, AND then pay monthly). Or the fact that you lose out on liquidity and interest.
  
  So pros
  1
  Cons
  3
  
  hmmmmmmmm

  Not even sure what your 3 are. Prepay to start? No.
  
  Liquidity? If you are that concerned with your liquidity you won't pay year end. No.
  
  Interest? Yes. But like I said the convenience is worth the $20 a year I would likely earn.
  
  
  
  So closer to 1-1. Even at 2-1 the disadvantages do not far exceed the advantages.
  
  
  Tell me exactly what you do with your taxes and insurance money? What type of interest rate are you earning?
• LJ

  

  Originally Posted by LJ
  How do they not? All you have is convenience.... forget about the deficits that will highly impact a budget. Or the fact that you have to prepay to start with (not as HUGE of a deal on a purchase, but a pretty huge impact on a refinance, you have to pay 1 year of taxes, AND then pay monthly). Or the fact that you lose out on liquidity and interest.
  
  So pros
  1
  Cons
  3
  
  hmmmmmmmm

  Not even sure what your 3 are. Prepay to start? No.
  
  Liquidity? If you are that concerned with your liquidity you won't pay year end. No.
  
  Interest? Yes. But like I said the convenience is worth the $20 a year I would likely earn.
  
  
  
  So closer to 1-1. Even at 2-1 the disadvantages do not far exceed the advantages.
  
  
  Tell me exactly what you do with your taxes and insurance money? What type of interest rate are you earning?

  Im on my phone so I will respond tomorrow in depth but have you ever seen a HUD-1? Lol. You most certainly do prepay with escrow. Most of the taxes will be then refunded by the seller up to the point of purchase, but you are then on the hook for the rest of the year at closing. Insurance requires proof at closing, if you pay monthly, no prepay requires. If you dont escrow your taxes, no prepay required. Christ you dont even know wtf you are talking about.
  
  As for being concerned about liquidity.... uhhh.... higher liquidity is always better. Not sure why if I am concerned about liquidity that I wouldn't pay at year end. Now you are just making shit up.
  
  I will make about $150 off of my property tax savings this year. I typically trade the money in Muni Bonds. Did I mention that it is tax free?
  
  So like I said, 3-1 against escrowing.
  
  I didn't even add in how their bi-annual review can cause your payment to skyrocket due to a deficit, whereas my constant review keeps me right on budget
• thedynasty1998

  

  Prepay isn't a disadvantage. Most things we prepay for.
  
  Liquidity is a matter of preference in terms of escrowing.
  
  So your $150 is based upon what? Monthly contribution? Rate earned? I'm curious as to how you are determining that?
• LJ

  

  thedynasty1998;887113 wrote:Prepay isn't a disadvantage. Most things we prepay for.

  Umm... money out in advance to hold a balance IS a disadvantage. Who taught you math? You know what I paid for property taxes and insurance at closing? $0. If you had a $2500 per year tax bill, and closed on June 30, you would owe $1250 at closing AND starting paying your $208 per month for taxes on your first mortgage payment. Tell me how that is not a disadvantage? lol.
  

  Liquidity is a matter of preference in terms of escrowing.

  The amount of liquidity one wants is a preference, but more liquidity is always an advantage.
  

  So your $150 is based upon what? Monthly contribution? Rate earned? I'm curious as to how you are determining that?

  is based upon actual returns. I bought my house aug 2007. I had 8 months of property taxes returned by the seller. I started saving for property taxes jan 1 2008. The seller's return of taxes paid for the first half os 2007 (which was paid in 2008) and 2 months of the 2nd half of 2007. I hold a 2 month balance in muni bonds that can be sold at anytime(earning 5% tax free), the rest (a payment of $225 per month) is used to buy and sell muni bonds, which returns an average rate of 5% yearly plus I will make a little bit in buying and selling sometimes.
• like_that

  

  No surprise here. Before opening this thread, I figured 2 things will be going on in here.
  
  1. LJ would be the resident smug POS know it all..... and
  
  2. Dynasty would try to provide his input, even though he went to a shitty school and worked a job that doesn't even require a college degree.
  
  It was a good laugh, thanks guys.
• LJ

  

  No surprise here. When I saw Like_that posted, I knew 2 things.
  1. He would call me a POS
  2. He would say something about Dynasty's education
  
  Thanks for being one of the most predictable posters on here.
• like_that

  

  LJ;887137 wrote:No surprise here. When I saw Like_that posted, I knew 2 things.
  1. He would call me a POS
  2. He would say something about Dynasty's education
  
  Thanks for being one of the most predictable posters on here.

  I called you a smug POS actually, which is really what you are. Very close though!!