Hey, this may be common knowledge for you guys, but for those of you who don't know, in many cases you may be eligible to detach your property taxes and insurance ESCROW account from your mortgage and save some or in my case a LOT of money.
I wish I knew about this a decade ago, but better late than never I guess.
The main benefits for me are:
- INSURANCE DISCOUNTS - AllState my home owners insurance company knocked 10% off the total yearly premium for paying yearly and another 5% for doing it with an auto bank draft. Along with this I removed a bunch of unnecessary stuff from my policy that I had no idea I was paying for. 2025 premium was $4500, and after all of this was said and done I'm down to $2000 for 2026. It's like finding $2500 and pulling it out of thin air and I can invest the difference now.
- EARN INTEREST - Now my yearly property taxes and home owners insurance payments sit in MY own Vanguard "Cash Plus" high yield savings account and builds up interest along the way all year long: 3-4% instead of sitting in the mortgage escrow account building interest for the bank.
- TINY MORTGAGE - I have to stay on top of saving for the yearly taxes & insurance, but I LOVE that my mortgage just went from $1800/mo to $800/mo - It feels much less overwhelming and daunting.
- AWARENESS - Tracking Taxes and Insurance along with principle and interest as separate categories in the budget (I use YNAB app) let's me know exactly when I'm overpaying for insurance or taxes so I know when I need to protest taxes or haggle/switch insurance companies. Where before it would take me months to decode it all and figure out what part of the mortgage payment was going to what.
It took about a day of phone calls with insurance company and with the mortgage company but well worth the effort. I'm very grateful for the neighbor lady that showed me how to this. So I highly recommend it.
First get quotes from other home insurance companies to see if you can do better and go with best price. Then tell them you want to pay yearly directly (not through mortgage company), look at your policy and cut the fat while you are at it. Then last call your mortgage company and tell them you would like to "detach escrow" from the mortgage, they will refund whatever is in that account and you put it in a Vanguard Cash Plus high yield savings account. Boom done.
I am married with 8 children so we don't have a ton of wiggle room on food buget and other things. Fixing home insurance, switching car insurance, no restaurants, and no subscriptions are the "secret money" that I have found where I've been unknowingly wasting 1-2 thousand dollars a month on. It's now a game to me. Find the money!
So now I have $2500/year less expenses, or $208/mo saved. That's about $60,000 I can chop off my FI number, plus reinvest the excess $2500 I was spending into VTSAX. And the bonus is that I'll make 2 or 3 hundo of interest on the ~$7000/yr of taxes & insurance that I'm holding onto in MY own accounts and reinvest that into VTSAX too!
Has anyone else done this? Any other "hidden money" you have found in other areas?
