The pros and cons of an escrow account

Make a minimum 20% down payment on your purchase of a Spring Texas home and the choice of an escrow account will be yours. A less than 20% down payment forfeits the choice.

If the choice of an escrow account is yours, should or shouldn’t you establish it?  What are the pros and cons of an escrow account?

Pros:escrow account home loan

  • Easier to budget.  Your monthly payment would include the principal and interest on the note, an estimated 1/12 of home owners insurance, and estimated 1/12 of your Spring Texas real estate taxes.  You won’t be caught off guard by a large bill that you forgot to budget for.
  • Fewer bills to pay.  Your lender will pay your homeowners insurance and county, school, and mud real estate tax bills when they are due.


  • Higher closing costs. Your lender may charge a fee to waive the escrow account.
  • Higher prepaid costs.  Your lender will require you to deposit 2 months of home owners insurance and 3 months of real estate taxes to establish the escrow account.
  • Lost interest. Your monthly escrow payments are deposited into a non-interest bearing account.

There is no right nor wrong answer to the question of should you or shouldn’t you establish an escrow account.  It all depends upon your personal preference.

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