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70 Ways For Home Buyers To Save Money When Buying A Home: Tip #2

Don't put insurance and taxes in escrow

When you get your mortgage, you will be asked (if your loan officer is honest) if you want to put the money for homeowner's insurance and taxes in escrow. Most people do not understand what this means.

Your mortgage company will determine how much you will have to pay for homeowner's insurance and in taxes at the end of the year. They will then divide this amount into 12 and add that to your monthly payment. At the end of the year, they will make the payments to the insurance company and to the tax collector for you.

Isn't that nice of them?


They only do this to protect themselves. If you forget to pay the homeowner's insurance bill and the house burns down, they can't foreclosure on you. Or if you do not pay the taxes and the government takes the house away, the mortgage company is left out in the cold. There is nothing they can do to get the house back and they lose the money they lent you.

By putting taxes and homeowner's insurance payments into escrow your monthly payments to the mortgage company will increase. They will hold your money for you to pay for the yearly taxes and to renew the insurance.

Why should they hold your money, when you can keep it until you need to pay. Even if you have money just lying around you can keep it in an investment and earn interest on it until it is time to pay your bill. The less of your money other people have the better.

So let's say your taxes and homeowner's insurance add up to $5,000 a year. If you take that $5,000 and put it in an investment account that earns 10% interest for the year, you will have $5,500 at the end. You then pay the insurance and taxes and you still have $500 left over!

When you pay homeowner's insurance and taxes in escrow you allow the mortgage company to put that money in THEIR savings account and they earn the $500 a year instead of you!

So if you want to make your monthly mortgage payment smaller and even earn some interest for free, then do not put your money into escrow.

Please note that homeowner's insurance is not the same as mortgage insurance. If you have a loan that is higher then 80% of the value of the house, the lender will require you to pay mortgage insurance. You have no choice in the matter. Mortgage insurance protects the lenders incase they have to foreclose on you. Homeowner's insurance protects the house incase something gets damaged. You choose the homeowner's insurance company you want. The lender will choose the mortgage insurance company they want.



Jesse Elliott got a rebate of $2,934!

Daniel Stidham saved $4,138!

Attony Wilson got $4,418 back!

Tamara Simon saved $2,658!

Ali Mustafa got rebated $7,400!

Piar Momin got $6,542!

James Gandi made $2,428!

La Sandra Melveaux got a rebate of $5,468!

Ernesto Maniego saved $2,746!

Neelum Nawab got $2,224!

Rolando Rubio made $2,350!

Farhan Shaikh saved $3,510!

Stephen Johnson got $2,426!

Bina Saleh got back $3,850!

Anthony Lawson made $2,016!

Manoj Kaul got a rebate of $2,588!

Sabiha Kidwai saved $2,350!

Baber Kahn Saved $3,816!

John Tumuno Made $3,698!

Gene Hoekstra got back $6,012!

Hussain Budhwani got back a whopping $4,090!

And that's just a few.

How much can you save?

"At first I didn't believe it, so I had Abby sign an agreement that he would give me 2% back at the closing. And he did.
Thanks so much."
- Allen Sams

"Abby gave me back $5,261 at closing. That bought us alot of furniture!"
- Alex Carr

"You would think that since Abby is giving the majority of the commission to us, that the service would not be as good as the full price agents. But you would be totally wrong. I have bought 4 houses before and Abby was by far the most knowledgable and competent and all the agents I have ever used.
- Sayeed Ali

"As an investor, it pays to have a real estate expert in my corner. Even the best investors need help from time to time, and Abby has always been there to help me out of a jam. I call him even before I call my real estate attorney.
-Ameen Kamadia

"Your service is phenomenal! I loved it. Where else can you get a better deal? I have already told several of my friends about you and I will continue to do so. I still can't believe how much money I saved. It's lucky for me that our paths crossed."
-Daniel Stidham

"Abby worked with us through the whole process of buying our first home. It was so wonderful to have the negotiations and the mortgage taken care of by one person."
- Robert Proctor.

"As an investor, I look for properties myself. Then I use Abby as my Realtor. I save money every time!"
- Raul Gonzalez .

"Abby, your service was so amazing, I have already told my family and co-workers about it. I can't stop talking baout it. Thank you so so much!"
- Jean Uribe.

"If you are buying a house, you must use Abby. You can't beat the deal he's giving you."
- Roland Armstrong.

"We were trying to buy a house for over a year, but couldn't save enough money. Getting 2% back let us buy our house 4 months ahead of scedule!"
- Cynthia Greer.


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