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Escrow Refund Check

post #1 of 6
Thread Starter 
We got a refund check for the overpayment on our escrow account for $284. Now I'm having a hard time trying to decide what to do with it. My first thought was to put it towards the principal on our morgage (interest rate is 5.75%), put the money towards a credit card bill (lowest is around 10%) or cash it and buy necessary items to finish off our basement to increase the equity we have in our home. We need sheetrock for over 1/2 of the basement. Which after sheetrocking we could tape and mud and textone to increase our living space buy about 500 sq ft. We live in a ranch style home with 1225 total finished living space. Or buy the rest of the items needed to finish off our second bathroom (counter top, sheetrock, light and exhaust fan). Currently we only have one bathroom for 5 people.

What would you do?
post #2 of 6
I would pay on the credit card debt. It has a higher interest rate than the mortgage. I wouldn't count on increasing the equity in your home with minor improvements. The market is fluctuating more than you can compensate right now. Another suggestion might be to "invest" in foodstuffs because they will get quite expensive this year. Stuff that you would use and keeps well for at least a few months.

post #3 of 6
You could also just bank it to earn interest, and save it for the year you have a shortage in escrow and need to pay in to avoid a higher payment. Due to higher taxes from higher house valuation (yes, the value fell, but it will take a year for the taxes to reflect the lower value) and higher insurance, my payment just went up $100 because I didn't have the extra to throw into the account. And I don't get it, because the shortage was only about $500!
post #4 of 6
If it was me, I would pay on my credit card (but that is my goal for this year - to pay that off). Our escrow amt is going up this year, so we are ending up with a higher mortgage payment each month starting next month.
post #5 of 6
I'm all for finishing the bathroom.
post #6 of 6
How much is your Credit card debt? Do you have a repayment plan for that in place? For example: if it's not much and you are getting your tax refund and will pay it off with that-then I would put it towards your home needs. If it's not going to be paid off soon or if it's high debt-I would put it towards debt.
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