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It's your money: Why Paying Property Taxes and Insurance Outside of Escrow Can Benefit You
For homeowners with good to excellent credit, many lenders allow you the option to pay your property taxes and homeowner's insurance yourself rather than funding a monthly escrow account. This gives you control over the money and provides a significant financial advantage.
The High-Yield Savings "Trick"
Deposit Monthly: Put the amount you would have paid into escrow each month into a High-Yield Savings Account (HYSA).
Collect Interest: Let the money collect interest for 12 months.
Pay Annually: Pay the tax and insurance bills when they come due using the accumulated funds.
You are collecting the interest on your own money instead of the bank.
Potential Annual Savings
| Savings Category | Sample Figures | Potential Annual Savings |
|---|---|---|
| Insurance Shopping | Shopping for new homeowner's insurance could save $200 - $400 on the premium. | $300 |
| Interest Accrual | Monthly deposit of $400 into an HYSA with a 4.5% APY. | ~$100 |
| Total Potential Savings (Estimate): | ~$400 | |