Do I get a better rate if I impound Tax and Insurance?

You are in California, so the answer is generally no. most lenders have no adjustment for impounds in California. Beware of some that will use that as a reason to increase your rate. You can get the exact same rate/fees with or without impounds.

You may get a slightly better rate if you do request impounds.

Impounds should not effect your rate. In some cases it will effect the fees paid by as much as 0.25% of your loan amount when you waive escrows.

Yes. Impounding reduces the lender's risk so most loans are quoted assuming that there are impounds. Impounds are required in many situations. If one chooses to pay for the additional risk of not impounding as a fee versus affecting the rate then your APR increases to reflect that added cost. Lenders can not hold more than 2 months of impounds as "reserve" beyond what is needed for the next tax or insurance bill, so you're never out more than 2 months of funds for bills you would have to pay anyway.