For a lot of loans you don't get a choice, and when you do, the interest you'd earn going it alone is smaller than it looks. Where escrow (impound) accounts are required: - FHA requires one for taxes, insurance, and mortgage insurance, no matter your down payment. USDA requires one too. - VA doesn't mandate one by program rule, but lenders typically set one up anyway. - Conventional generally requires impounds when you put less than 20 percent down. Waiving them is a lender-by-lender option beyond that, so confirm the requirement for your specific loan. When escrow truly is optional, run the math. An impound account pays essentially no interest, but the balance builds up and draws down all year, so the average balance is modest. On roughly $12,000 a year in taxes and insurance, even a strong savings yield might earn you a few hundred dollars a year, before taxes on that interest. Against that, escrowing spreads a large annual bill (a $7,000 to $8,000 property tax hit is common) into your monthly payment and takes missed deadlines and late fees off your plate. Jeb escrows by choice for exactly that reason. For most people, the discipline and convenience outweigh the few dollars of lost yield.