The $800 Surprise
Over the weekend, we got the usual mail of catalogs, periodicals and weekly grocery inserts. On top, though, was a letter from our mortgage company that didn’t look like a bill (it was pink behind the window, not the normal bluish-gray).
I’ve come to identify whether a mailing from our mortgage company is spam or important based on the thickness and writing on the envelope, but this one caught me off guard. Once inside, I opened it up.
Inside was a check for $800 (and some change)!
Apparently we’ve been overpaying on escrow by quite a bit and the mortgage company sent us the leftovers. But then I recalled this wasn’t the first time. Last November 2nd, I wrote about getting a $284 check, and a lower mortgage payment.
So where did this money come from? Why $800? Should I be worried that they’re not collecting my tax or insurance escrow properly? Actually, I think I know what happened.
Back in June, I switched from Allstate to Erie Insurance for homeowners and auto insurance (saving a ton of money). My old homeowner’s insurance was about $900, while the new one was $650. Since I paid for a full year outside of the escrow payment when I switch insurance, I think this refund was the mortgage company’s chance to catch up in what appears to be a yearly audit.
While the last refund resulted in an $85 lower monthly payment, this one only nets me a $8 per month savings. I won’t complain, but I will make sure they’re still collecting the insurance escrow for next year’s payment!
I can’t wait to be free of my mortgage so I don’t have to pay escrow. I could be making money on it if I had it in my bank account. Not to mention 2 years ago they “forgot” to pay my property taxes and the county sent me a letter about it. Boy was I mad. I think in 2-3 more years if business continued to go well I’ll be saying bye bye to them and hello to a new escrow bank account.
I no longer pay escrow on my mortgage. Once I reached 80% loan-to-value, I requested that my credit union release my escrow and allow me to pay my own property tax and insurance. Now, I have a separate withdrawal from my paycheck into an ING Direct account that earns me much more than my credit union escrow account did. Now that I’ve released the escrow, my mortgage payments will never change and I never have to worry about catch-up payments again.
maybe i was lucky, or maybe my bank loves me, but they gave me the option to put money in an escrow account, and i just said “no thanks, think i will pass on that one”.
I have had Erie Insurance for a few years now and saves a TON of cash with them. The house I have now, I have a $2500 deductible so my yearly insurance is about $350! Can’t beat that! I also have my cars with them as well.
Dave
Wow! That’s a pleasant surprise!
good work! you’re like the 3rd person this week i’ve heard this happening too 😉 send your good luck charm over here, okay?
Congratulations on your unexpected windfall – Merry Christmas!
As I’m becoming more financially smart & savvy, which is due to my use of the Money Merge Account system (an online financial management program that’s helping me leverage my money so I will pay off my mortgage and some other debts in less than 10 years, rather than the 25 years I had left to pay), I too wrote to my mortgage company and requested that they stop escrowing my property taxes and homeowners insurance. Because of my loan-to-value ratio and since I’d had my mortgage for more than 3 years, they agreed.
Why should I send the lender/bank $300 extra per month which they can then invest and make money from, when I can put it to much better use either earning interest or canceling interest, which ultimately improves my financial situation?
It’s a similar concept to your income tax withholdings. Why let the US government use your money interest free for a year when you can increase your withholding allowances and, with just a little discipline, put that extra money in each paycheck to work for you – leveraging it to improve your own financial situation.