Each lender has their own policies, but when I am working with a new homebuyer, it is easier to pay into an escrow account so that you're sure you have the monies available when your taxes and insurance are due. Even if the lender doesn't require it, you may find it's a good way to ensure your own peace of mind as you adjust to the idea of home ownership and that it involves.
I hope that helps. Your specific answer will come from your lender.
You can instead earn the interest income if you keep the money set aside in an interest bearing account until your installment payments are needed and pay for them yourself.
There is no right or wrong is just what you are more comfortable with.
And when using an impound account, you aren't paying interest on your taxes/insurance, you only pay interest on your actual loan balance....there's also no cost to set up an impound, nor do you get a lower rate, though you may get a slight pricing incentive of 1/8 point, which typically equals means $100-$200 reduction in closing costs...
Also, if your lender has collected too much $$ for your impound account, they are required by law to send you these excess funds!
Let me know if there's any more information I can provide,
Best, Jeff Marr
That way the money is there when you need it. Also don't forget to put some $ aside for your supplemental tax bill if there will be one.
This will depend on your loan and your personal habits. Some lenders are going to require an impound account (monthly payments). The benefit of paying them when they come due is that you are not pre-paying, hence losing interest, on your own money by paying so far in advance. The flip side to this is that some people have a difficult time setting money aside and not spending it.
Hope that helps!