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Is it better to pay more money to the principal or the escrow on my Home Mortgage Loan?
...asked on January 6th, 2012 @ 6:25 pm in Loan - Home
What? You want to pay to your principal. Your escrow pays your insurance and taxes. That is adjusted every year by your loan company. I don’t think they’ll let you pay a bunch more on your escrow.
...answered by Kathleen M on January 6, 2012 @ 7:01 pm
Adding extra money to your escrow does nothing for you, unless you have reason to anticipate you will have a shortage in your escrow account. Otherwise, the bank will actually have to refund your excess money once a year when they review your escrow accounts. They are required by law to do so.
Put your extra money against principal. It will save you money on interest every month thereafter.
...answered by fukinluckyfuker on January 6, 2012 @ 7:38 pm
Escrow is simply a holding company that acts as intermediary between you and the lender. You pay escrow fees when you close a mortgage deal, and they can put aside an account for you to pay taxes and insurance, known as impounds.
But paying principal refers to paying off equity in your home. This is ideally what you strive to do as a homeowner. Once you pay off all the principal, the home is yours, free and clear. You own it!
You can also pay interest-only, which means you’re only paying the interest, and gaining no principal, or ownership in your home.
It’s great to pay off more principal if you can…it gets you that much closer to owning your home. If that is your desire. Some people don’t care about ownership, and prefer to leverage their money elsewhere, such as in other investments. These people just pay off the interest, or even less than interest with negative amortization loans.
Educate yourself about credit, finance, and mortgage at:
...answered by Scot184 on January 6, 2012 @ 7:38 pm
Pay more money to the principal. If you put too much in your escrow acct. (taxes and ins.) the lender will send the $ back.
Paying more on the principal pays your mortgage down quicker.
More questions? click4rick.com
...answered by click4rick.com on January 6, 2012 @ 7:39 pm