| Impound / Escrow Waiver Fee Break-Even |
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| Copyright: The Finance Buff |
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| This spreadsheet helps you decide whether to use an impound / escrow account |
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| for a mortgage when there is an escrow waiver fee. For more information, see |
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| Use Impound / Escrow Account Or Not |
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| Assumptions |
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| Loan amount |
200,000 |
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| Impound/Escrow Waiver Fee |
0.125% |
of loan amount |
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| Property tax (annual) |
$3,000 |
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| Homeowner's insurance (annual) |
$600 |
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| Number of months as cushion |
4 |
months |
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| Interest rate in impound / escrow account |
0.0% |
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| Interest rate in your own account |
2.5% |
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| Marginal tax rate (federal + state) |
25.0% |
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| Calculations |
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| Fee for waiving impound/escrow |
$250 |
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| Average balance in impound/escrow account |
$3,000 |
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| Lost interest, before tax |
$75 |
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| Lost interest, after tax |
$56 |
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| Years to break even |
4.4 |
years |
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