Would You Ever Not Escrow Tax/Insurance If Given The Option?

[Mark S.]

I just found out from my mortgage folks that I have the option to not escrow taxes and insurance on my upcoming investment property purchase. I’ve never been given this option before and always assumed you had to escrow taxes and insurance on a financed property. With that said, I am planning to quit claim to my LLC once closed and am wondering if there is somehow “less risk” of the loan getting called if I choose NOT to escrow and pay the taxes and insurance directly from the LLC account. I’ve heard that the lender often finds out about LLC transfers from insurance and property tax info. I’m assuming that even if I choose NOT to escrow that the lender is obviously still going to want to know the property is insured (for them to loan on it) and I’m almost wondering if somehow this could “backfire” and cause them to keep an even closer eye than they otherwise would since they’d likely require (potentially) more documentation for proof that insurance is in force, etc., since they’re not the ones paying it from the escrow account. Thoughts? Anyone here to NOT to escrow? If so, why? If not, why not?

[Carl Fischer]

@Mark S.

If you pay taxes and insurance you have the use of the money and may be able to put it to work instead of it sitting there lazily in an escrow account. 

When you get insurance make sure both you and the LLC are insureds and bank won't catch it.

It is generally easier to have it escrowed and one less thing you have to be concerned with as @denny wu suggested