[lee l]

On my monthly mortgage payment it asks me if I want to make anyextra payment to the principle or escrow or both? Can anyone explainto me if I have some extra money which one should be payed downfirst?

[Beetle in a Box]

Your escrow account is a bank account that is set aside as a savings pool for money for annual expenses like insurance and property tax bills. When these come due they are paid out of the escrow account. Unless you have changes in the amounts of your insurance and property tax bills, there is no reason to pay extra into your escrow account. If you want to pay extra on your mortgage you want that money to go to the principle, which is how much you actually owe on the house. Note that many times paying down a mortgage fast is not the best choice. If you already have other savings and investments, it could work out for you. But if you have no savings and pay extra on your house, that won't save you if you lose your job, can't cover the mortgage, and get foreclosed. If you instead save that money in a savings account, it could help cover your expenses in case of job loss. Additionally, mortgage rates are usually low, many ~6% and under. This means you could get higher returns from investing the money in stocks and bonds (or you could lose your shirt, of course). If you already have at least 6 months expenses saved in case of job loss, are continuing to save money for other goals, and would like to pay off your mortgage sooner, making extra principle payments could work out for you.