An escrow waiver is a request to waive the escrow account for taxes and insurance; lenders may approve for which conditions?

• A. A request to waive the escrow account for taxes and insurance; lenders may approve for large down payments or risk-based criteria.
• B. A request to increase the escrow payments
• C. A method to lock in a lower interest rate
• D. A substitute for appraisals

Answer: (A)

An escrow waiver means the lender is willing to stop collecting monthly funds to cover property taxes and homeowners insurance and instead let you handle those payments yourself. Lenders grant this only when they consider the borrower lower risk. The most common reason is a large down payment, which lowers the loan-to-value ratio and reduces the lender’s risk of default. In addition, risk-based criteria come into play—things like a strong credit score, adequate cash reserves, stable income, and a low debt load can all make a lender comfortable with self-managed taxes and insurance. If these conditions aren’t met, the lender typically requires keeping an escrow account to ensure timely payment of those ongoing bills.

Other options don’t fit because increasing escrow payments defeats the purpose of waiving it, and the waiver isn’t a tool to lock in a lower rate or to substitute for appraisals.