To Escrow or Not to Escrow

[Sean Grady]

Hi amazing BP forum...I'm looking for your opinions and expertise regarding escrow.  I'm considering the possibility of paying my own escrow as a 1x payment rather than including it in my monthly mortgage payment.  Is this possible when taking out a mortgage?  What are the pro's and con's?  Is anyone else employing this strategy to increase cash flow and possible invest the savings?  Can't wait to hear your thoughts???

[Will Fraser]

Hi @Sean Grady, it is a tantalizing option indeed!  I fought hard for this when I had one property, then again at two properties.  Fast forward a few and now I'm asking the banks to escrow funds!  Ha!

For me it came down to simplicity and mis-leading accounts.  Every time I see a lump sum in the account it is tempting . . . tempting to borrow from it or "optimize it", or something similar.  Now that bank accounts are issuing a paltry Pittance And A Penny in interest I am tempted to take more risk than is wise in order to optimize it.  So, in order to bless myself with simplicity and police myself well, I'm back to delightedly letting the bank escrow my taxes and insurance and gladly monitoring them :)