What is true regarding property tax and insurance escrows for a buyer making a 25% down payment?

When a buyer makes a 25% down payment, they typically have a significant equity stake in the property. This level of down payment often gives them more flexibility regarding their mortgage terms, including the option to handle property tax and insurance payments through escrow accounts.

Escrows are accounts where a portion of the monthly mortgage payment is set aside to pay for property taxes and insurance upfront, alleviating the burden of having to make these payments in full when they come due. While lenders commonly require escrows, especially with lower down payments to mitigate their risk, a buyer making a larger down payment, such as 25%, may have the option to choose whether or not to have these payments escrowed.

This ability to opt-in or opt-out of escrow accounts can depend on the lender's policy; however, buyers with substantial down payments often have more bargaining power in choosing their escrow arrangements. Thus, the assertion that a buyer may choose to escrow taxes and insurance accurately reflects the typical scenario under these circumstances.