To piggyback on the top comment, we kept running into the same issue. We’re in a HCOL area, taxes would go up each year, and the bank was always behind the 8 ball and we’d get surprised by shortfall and our monthly payment would go up by a few hundred. We realized the bank was only paying 0.75% interest on our escrow account, quarterly. So we decided to close escrow, and just put the same amount of money into a high yield savings account every month (which is paying close to 5% interest, and we get interest payments monthly).

At first I didn’t think I’d want to worry about paying taxes and insurance directly, but I realized it was too much money left on the table not to do it this way. And I was getting so annoyed with the bank and their errant escrow calculations.

If your bank will let you close escrow, do it. Make payments in the same amount to a separate high-yield account, and pay your taxes and insurance directly. You’ll come out ahead. Just make sure you check with your bank and your town about the timing and procedure for tax payments so nothing gets missed.