What should I do with my escrow surplus?

Discussion
1

I’m trying to make a well-informed decision about our escrow surplus. I have about $2200 in surplus, which I can either cash out or apply toward my mortgage. Our mortgage is about $2945, and we want to get it closer to $2700, which is what it was a couple of years ago when we moved in. Applying the escrow surplus would bring it down to that amount.

I know others might say ‘pay down your high-interest rate,’ which is valid since we have about $1800 in credit card debt, but we have a solid plan to pay it off in about 2.5 months. We also have other debts like a personal loan of $8.4k, which are high interest. We want to eliminate this debt, but the thought of a lower mortgage is also appealing.

So, knowing what you financial experts know, what would you be more inclined to do?

2

I put my escrow surplus back into the escrow because you never know if next year’s taxes and insurance will go up.

3

If you have actual credit card debt, use it to pay that down.

4

Yani said:
If you have actual credit card debt, use it to pay that down.

Thanks!

5

Ty said:
Escrow surplus now is an escrow shortfall later. Believe me :cry:

The money isn’t going to sit there; they either cut you a check or apply it to the monthly payment.

6

Ty said:
Are you sure? How long ago did you buy? Sometimes it takes the county a year or more to reassess the property.

3 years ago. Yes, we have a surplus.

7

Pay down the highest rate debt first, almost always without exception.

8

You should have received an escrow analysis from your lender with estimated taxes and insurance. Compare the estimates vs actual payments.

9

Pay off your credit card debt. $2,200 isn’t a lot, and having $1,800 in credit card debt is very little. Why are you struggling with this small amount?

10

Luca said:
Pay off your credit card debt. $2,200 isn’t a lot, and having $1,800 in credit card debt is very little. Why are you struggling with this small amount?

The credit card debt is from holiday expenses. I usually pay off balances every month, but it was hard during the holidays.

11

Are you saying you think applying that to the mortgage will drop your payment $245 a month? What loan did you take out?

12

I like to apply any escrow overages to the principal.

13

Put it back in your escrow account.

14

Lian said:
Put it back in your escrow account.

If you’re going to do that, just apply it to the principal or stick it in a high-yield savings account.