Closing Costs Explained - Escrow - Discount Points

In this article,LendingTree will explain the cost of a mortgage, including closing costs. We'll help you understand how to differentiate PMI from PITI, understand origination and discount points, and learn about escrow.

Which costs to focus on for the biggest savings

Many home buyers focus on just one cost, when really, there are a wide range of mortgage costs to consider whenshopping for a home loan. Typically, buyers focus on gettingthe best mortgage rates when comparing quotes from lenders.And that's smart...

Using a mortgage payment calculator and some basic math, you can see that someone taking out a loan for $180,000, with a 3.5% APR loan on a $200K home is likely to pay just over $110,000 in interest over the lifetime of a 30-year fixed-rate mortgage. Anything that can be shaved off that cost is going to be welcome.

However, just because interest is by far the biggest of the various mortgage costs, that doesn't mean you should ignore the others. Closing costs vary widely between mortgage lenders and loan programs. Typically they run from two to four percent of the home's purchase price. In the example above, that would be $4,000 to $10,000.

Consumers who compare quotes from several lenders may be able to place themselves at the lower end of that range. There's absolutely no reason for a buyer not to contact competing lenders and choose the loan with the lowest overall costs.

What's Tax Deductible?

There's a widespread belief that all closing costs are deductible when filing federal taxes. That's untrue for most, but there are exceptions -- and they can be big ones.

The IRS says the following may be deducted by those who itemize their deductions:

Any property taxes paid by the buyer at closing, although there are special rules for cooperatives.Prepaid mortgage insurance premiums (MIPs).Mortgage origination fee. That's is usually expressed as a percentage of the home loan amount, for example one point.Discount points used to "buy down" a mortgage rate. These are paid to obtain a lower interest rate, not to originate the loan. These have to be pro-rated and deducted during the life of the mortgage. If you paid $3,000 in discount points to reduce the rate of a 30-year home loan, you'd be able to deduct 1/30th of the points, or $100 per year. If you refinance your mortgage, you'll be allowed to deduct any discount points that have not yet been deducted.Mortgage interest paid during the year.

To deduct any of these costs, you have to itemize your deductions on a Schedule A. If you take the standard deduction, you cannot deduct closing costs or interest expense.

Closing and Mortgage Costs

Most closing costs are related to the mortgage or are associated with home ownership.

Appraisal fee. Paid to the professional who assesses the value of the property.Attorney or title company fees. This is for escrow services when you sign the documents and complete a property purchase.Credit report fee. Covers the costs of checking your credit rating.Discount points. These are paid to get a lower mortgage rate.Impounds. These are pre-paid property taxes and homeowners insurance. They are not a lender fee but are simply costs related to owning a home, If you borrow more than 80 percent of the purchase price, most lenders require impounds. They prorate these amounts and add them to the monthly mortgage payment. Then the lender pays your insurance premiums and taxes as they come due.Inspection fees. It's recommended that buyers have a professional inspection to make sure the home is safe and livable.Loan origination fee. Charged by the lender for processing the mortgage application. It's usually defines as a percentage of the loan amount (in this case it's an "origination point" and not a "discount point") but it may also be a flat fee.Pest inspection fee. This determines if the property has termites or any other infestation.Recording fee. Charged by the city or county for recording the ownership change for the property and the lender's lien against it.Title insurance fee. There are two policies the buyer's and the lender's. The first one protects the buyer in the event that the title is not clear. The second protects the lender's interest. If you finance a home purchase, the lender will almost certainly require that you purchase a lender's policy.Title search fees. A search is intended to uncover any encumbrances on the title, such as unpaid mortgages or tax liens.Underwriting, processing, document preparation, courier fee, and more. These lender fees may be charged by the lender as separate items but are commonly wrapped into the origination. In the industry, these are called "junk fees" and they are absolutely negotiable.Good Faith Estimates

Good faith estimates (GFEs) protect buyers by disclosing home loan costs when they apply for a mortgage. Lenders must provide a GFE, which lays out the basic terms and expected costs of the loan, within three working days of receiving a mortgage application. Many are willing to provide one before you actually apply, which makes shopping for your mortgage easier.

Other lenders do not issue GFEs to loan shoppers. Instead, they provide a "worksheet" or "scenario." There is nothing wrong with this, but you should be aware that only an actual GFE provides certain protections.

Lenders must issue a new GFEs any time there is a "material" change in your application (for example, you applied for a 30-year fixed loan but then switched to a 5/1 ARM). Your actual closing costs must essentially match the final GFE.

Closing costs are divided into three categories those which cannot vary from what was disclosed at all (most lender fees fall in this one), those that can come in higher but within certain limits (most of these are services from lender-selected providers), and those that can change by any amount (those are mostly costs from providers chosen by the borrower). We explain more about this in our article: the mortgage closing process explained.

Additional Resources

Here are some additional resources to help you better understand the mortgage costs and closing costs.


7 New Year's resolutions every photographer should make

7 New Year's resolutions every photographer should make

With a new year around the corner you may be considering some ways to improve your life and career. For the photographers out there, from the occasional Instagrammer to professionals, here are some tried-and-true resolutions (pun intended) to break out of a creative rut or improve your skills in the coming year.

Move away from the center

Instagram's emphasis on squares was big and something new for a lot of photographers. Now that Instagram supports both portrait and landscapes, it's time to make better use of that space. The "rule of thirds" is a beautiful thing, and it means you don't need to drop whatever you're focusing on directly into the middle of the frame. Use the space you've been given and make your photos more dynamic.

A photo posted by Junny (@junnyrw) on Dec 23, 2015 at 7:17am PST

Forget your filters, embrace the sliders

Filters are a major part of Instagram's popularity, but they make your shots look like everyone else's. Sliders are where you can really make a picture your own and avoid the heavy-handed filters that are Instagram's mainstay.

Go Manual

This is a big stepping stone for the budding photographer. Whether you're on a smartphone or a feature-laden DSLR, learning to control and adjust your exposure manually to the specifications you need is essential in growing creatively.

Avoid shooting in bad light...

Director Terrence Malick and Instagram users everywhere agree: that time around sunrise and sunset will give you the best light possible. Dubbed "the magic hour," the light available during those times is softer, warmer and put simply, makes everything look better.

A photo posted by Norten Menezes (@nortenmenezes) on Dec 22, 2015 at 8:10pm PST

. . . But break that rule every now and then

You can make good pictures when the sun is high in the sky. Midday light can produce dramatic shadows and interesting patterns.

A photo posted by Katayoun Afrooz (@katayoun_afrooz) on Dec 23, 2015 at 7:21am PST

Blow out that background

If your subject is extremely backlit (think of someone in front of a big bright window) you may be inclined to pop your flash to evenly expose your foreground and background. Instead, try just getting the exposure right for your subject's face in the natural light and letting the background get completely blown out. It's a great simple trick to make a clean, beautiful photo.

A photo posted by Lize van Wyk (@l.v.w_photography) on Dec 19, 2015 at 10:23pm PST

Embrace imperfections

The technically perfect photo isn't always the best. An off-kilter composition, a little bit of motion blur or slightly askew colors can elevate your picture and add interesting elements you didn't know would work. Experimentation is the key to unlocking your personal vision.

Have something to add to this story? Share it in the comments.


Liberty Tax Service to Report First Quarter Fiscal 2016 Results on August 28, 2015 | Reuters

VIRGINIA BEACH, VA--(Marketwired - Aug 17, 2015) - Liberty Tax, Inc. (NASDAQ: TAX), the parent company of Liberty Tax Service, announced today that it will report its earnings for the first quarter of fiscal 2016 before the market opens on Friday, August 28, 2015. At 8:30 a.m. ET on the same day, the Company will host a conference call to discuss its earnings. To listen to the call, dial 855-611-0856 (domestic) or 518-444-5569 (international), conference ID code 4280497, approximately 10 minutes prior to the start time of the call. The call will also be webcast in a listen-only format. The link to the webcast may be accessed on the Company's investor relations website at, under the "About" tab.

A telephonic replay of the call will be available beginning shortly after the call continuing until Friday, September 4, 2015, by dialing 855-859-2056 (domestic) or 404-537-3406 (international). The conference ID code is 4280497. A replay of the webcast will also be available at the site listed above beginning shortly after its conclusion.

About Liberty Tax, Inc.

Founded in 1997 by CEO John T. Hewitt, Liberty Tax, Inc. is the parent company of Liberty Tax Service. Liberty Tax is the fastest-growing tax preparation franchise and has prepared nearly 20 million individual income tax returns in more than 4,300 offices and online. Liberty Tax's online services are available through eSmart Tax, Liberty Online and DIY Tax, and are all backed by the tax professionals at Liberty Tax locations and its nationwide network of approximately 35,000 seasonal tax preparers. Liberty Tax also supports local communities with fundraising endeavors and contributes as a national sponsor for many charitable causes. For a more in-depth look, visit Liberty Tax Service and interact with Liberty Tax on Twitter and Facebook.


Internet - InfoBarrel

Since the latter part of the 20th Century, computers and their associated technology have taken over our lives, in so many ways.

There are few jobs these days that require little or no input fom this technology. Barcoding in Supermarkets has enabled efficient management of stock, computer designed data bases hold a myriad of information and even our health care records in the UK, will soon be computerised.

One of the most exciting and, yet, perhaps worrying aspects of computer technology, is the Internet.

This world wide connection of computers has opened many new technological doors.

Smaller networks of mutiple computers link up to form the World Wide Web, www.

It would seem that a form of the Internet was around in the fifties. In 1957, as the Soviet Union began it space exploration, an early form of the Internet was used. Various changes took place over the years and America used similar technology.

The Internet, as it is used today, seems to stem back to around 1983. This does however mean that the Internet, although not in its infancy, is not yet fully developed.

Using a standard Internet Protocol, or IP, these computers can transmit data around the world in a flash. One of the most interesting aspects of the Internet is its easy accessibility to all. With a suitable ISP, internet service provider, anyone can access and utilise the Internet.

These days people of all nationalites, both sexes and various age groups, access the Internet on a daily basis. The Internet is used as:-

A means to earn some money For research To compare prices Shopping Banking For entertainment in the form of games or music, for example. To watch Television Programmes To watch films To down load films and music To chat online To make virtual friends For criminal activities Pornography Gambling Blogging, which is keeping an online diary or log.

And so much more.........................

What we must never forget about the Internet though, is that currently it is not policed. This is as it should be, however, this can lead to various problems.

People and businesses are not always who or what they claim to be. The Internet has far too much pornography and too many scammers. Scamming is a form of online crime, in that it can cause havoc with computer systems.

Internet users need to protect their identities and personal information, as this is a precious commodity these days. With just a handful of a person's personal details, Internet thieves can run up huge amounts of debt in your name. This could blacken your credit score for many years and worse.

As hackers become even more clevern new bugs and viruses are active on the Interent. This has led to a growth in at least one industry, The one that provides good anti-virus software for your computer.

Finallyn although the Internet is a wonderful resourcen the user must remember that, on the whole, it is not regulated. Information stored on the Internet is sometimes out of date, inaccurate or simply false. Although this is possible with the written word, on the whole libraries store more accurate information than the Interent.

However, most libraries will be unable to store and share the amount and diversity of information that the Internet can.

With email messaging helping people around the world stay in touch cheaply, quickly and constantly the Internet provides a useful service. As it progresses this service will adapt and improve but one thing is for sure, it is here to stay.


How Can I Get Money When Times Are Rough? Tips To Survive The Recession

Even if you are not making mistakes handling your payroll internally, you still are wasting your most valuable asset, TIME. Time is the 2nd reason you should outsource your payroll company. Your time equals money to your business and even if delegate the responsibility to a member of your staff, there are some additional things you need to be concerned about. Their time doing payroll is money lost to your business. Not only do you have to pay their salary or rate of pay, but you have to pay the employer tax expenses, workers compensation, and employee benefits.

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The payroll services los angeles can help you through a time of emergency or can be a welcomed addition to your tools. They can help in so many ways that you will wonder how you survived without them. They can help with new hire set ups and any federal or state tax or withholding questions. They can meet with you and give you a quote for the services you require. The company manages the items agreed on by the business owner. This frees up the owner to spend more quality time developing his business.

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If you can check out then you can see that there are companies which are actually giving you all that is needed for the keeping the accounts in track. But to make these things under a perfect control you need to make sure that you should avail the services for an advanced solution. In fact there are companies which are actually giving you the best service in terms of managing these accounts to the best way.

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