Your idea should technically (depending on how much extra you send in) prevent your monthly payment from rising but at the end of the year, the mortgage company will issue a check for any “escrow overage” and you’ll be right back where you started — except you’ll have most of your money back.

The best way I’ve found to lower your monthly payment on a fixed mortgage is to pay for your home insurance yourself rather than through the escrow account.

Second, you will probably be able to request that they remove escrow and return the funds to you. You can then assume control of all of those funds and pay taxes yourself. Plus you can gave some extra interest on that money while you manage it.

Third, belated congrats on the credit card payoff! Keep digging!

So, for each mortgage payment I send in, they assign $438.05 each month to this escrow account to cover the expenses they pay on my behalf. It’s one of those “hidden” mortgage expenses.

I remember when I was playing with online mortgage calculators before I bought my house thinking, “wow, houses aren’t very expensive.” Then the first mortgage bill came in with all of the “extra” costs outside of principle and interest. At the onset, it nearly doubled my monthly mortgage bill. It was a major reality check.

For my focus, I am going to push the auto loan aside because it doesn’t have a deadline looming like the escrow account. If I don’t make it by October, I’ll be locked into another year of overpaying by $1020.80 ($85.15 x 12 months), and that will suck…

Still, I do have one question. What is the escrow account for on a mortgage? Before the sale, I understand it’s something like ernest money, but what is it for after the sale?