Yes, most Arizona homeowners can waive escrow on a refinance, and the usual price is a rate bump of about 0.125% to 0.25%, or a small fee at closing instead. You keep control of your property tax and insurance money, and you take on the responsibility of actually paying those bills on time. Whether that trade is worth it depends far more on your cash discipline than on the math.

What an escrow waiver actually is

An escrow waiver, sometimes called an impound waiver, means your lender collects only principal and interest each month. Your Maricopa County property taxes and your homeowners insurance premium become bills you pay directly, on their own schedule, out of your own account.

Without a waiver, the servicer collects roughly one twelfth of your annual taxes and insurance every month, holds it, and pays those bills for you. That is the default on most loans, and for a lot of people it is the right default. Escrow is not a fee. It is your money being held and disbursed on your behalf.

Who qualifies to waive escrow in Arizona

Qualification comes down to loan type and equity. On a conventional refinance backed by Fannie Mae or Freddie Mac, lenders will generally consider a waiver at 80% loan to value or lower. Some price it more aggressively above 80%, and many will not allow it at all once you cross into higher LTV territory with mortgage insurance attached.

FHA loans do not permit escrow waivers. Neither do USDA loans. VA loans technically allow it, but most lenders overlay their own requirement and decline. Higher priced mortgage loans under federal rules are required to escrow for at least five years regardless of equity. If you are refinancing a Scottsdale or Phoenix property with meaningful equity on a conventional loan, you are in the group that usually has the option.

Lenders also look at payment history. A recent late payment on your current mortgage, or a history of property tax delinquency, will get a waiver request declined quickly.

What waiving escrow costs you

There is no free version of this. Lenders price the added risk one of two ways. Most commonly they adjust the rate up by an eighth to a quarter of a point. Alternatively some will charge a one time fee at closing, often 0.125% to 0.25% of the loan amount, and leave the rate alone.

Run the number before you decide. On a $500,000 refinance, a quarter point rate bump runs roughly $70 to $80 a month depending on where rates sit, which is close to $900 a year, every year, for the life of the loan. A one time fee of 0.25% is $1,250 once. If you plan to keep the loan more than about 18 months, the one time fee is usually the cheaper structure. Ask for both quotes and compare them side by side on the Loan Estimate.

Why some Arizona homeowners want the waiver anyway

The appeal is control and float. Arizona property taxes are billed in two installments, due October 1 and March 1, with the second half not delinquent until May 1. That means money sitting in a high yield savings account for months instead of sitting in a servicer's non interest bearing escrow account. Arizona does not require servicers to pay interest on escrow balances, so that float has real value to a disciplined saver.

It also removes escrow shortage surprises. When Arizona homeowners insurance premiums jumped over the past few cycles, thousands of Valley homeowners opened a servicer letter announcing a shortage and a higher monthly payment. Without escrow, your mortgage payment never moves. Your insurance bill goes up, but you see it directly and can shop the policy instead of absorbing a payment increase you did not expect.

Investors and self employed borrowers often prefer the waiver too, because irregular income makes a lower fixed monthly obligation easier to plan around.

Why most people should probably keep escrow

The failure mode is brutal. Miss your Maricopa County tax installment and the county can eventually sell a tax lien on your property. Let your homeowners insurance lapse and your lender will force place a policy that typically costs several times what you were paying and covers the lender, not your belongings. Both events are also a default under your deed of trust.

A waiver also makes you set aside roughly $400 to $700 a month, on a typical Metro Phoenix home, into an account you do not touch. If that money will get spent, the rate discount you gave up for escrow was the better deal by a wide margin. Be honest with yourself about this one.

One more practical note. If you currently escrow and you waive it on a refinance, your old servicer refunds your existing escrow balance, generally within 20 business days of payoff. That refund is not a windfall. It is the tax and insurance money you now owe directly, so park it rather than spend it. Curious what your options look like on a specific property? Start with what is on the market at Arizona Luxury Property Search, then run the numbers with Pillar Mortgage Group, where shopping multiple wholesale lenders means comparing waiver pricing across several at once instead of taking the first quote.

The Arizona tax calendar you are taking on

If you waive escrow, two dates become your responsibility and nobody sends you a reminder with teeth. Arizona property taxes are billed in two installments: the first half covers January through June and is due October 1, delinquent November 1. The second half covers July through December, due March 1, delinquent May 1.

Miss those and interest accrues at a rate that makes the whole exercise pointless. Worse, a delinquency is visible to your servicer, and most notes give them the right to force escrow back onto the loan if taxes go unpaid. You lose the waiver and you keep the higher rate you paid to get it.

Two practical things make this work. First, pull your actual parcel number and confirm your assessed value with the Arizona Department of Revenue rather than assuming last year's bill repeats. Valuations move, and in parts of Maricopa County they have moved a lot. Second, set the money aside automatically the same day your mortgage payment clears, in a separate account you do not treat as spendable.

Insurance is the other half. Arizona homeowners premiums have risen sharply, and if your policy lapses your servicer will force place coverage that typically costs several times what you were paying and protects the lender rather than you. That is a much more expensive mistake than a late tax payment.

The homeowners who do well with a waiver are the ones who treat those four payments like a mortgage payment. The ones who do badly are the ones who treated the waiver as extra monthly income. Be honest with yourself about which one you are before you take the rate bump.

Run your own numbers

If this is on your plate right now, a few things worth reading next: what happens to your old escrow account, why escrow shortages raise your payment, and how Arizona property taxes work. For the wider picture, Our loan programs page and the process page cover what we can actually do and what the process looks like. And if the plan involves buying rather than staying put, current listings are at Arizona Luxury Property Search.

The Consumer Financial Protection Bureau explains what an escrow account is actually doing and why servicers care. The Arizona Department of Revenue publishes the Arizona property tax calendar, and those two installment dates are the entire risk you are taking on.

Honest caveat: most people should keep escrow. The waiver pays off if you are genuinely disciplined and can earn something on the float. If there is any chance a $3,000 tax bill arrives in a month where money is tight, the rate bump is cheap insurance against a much worse outcome.

Frequently asked questions