A lender estimates the closing costs on a home loan will be 3% of the loan amount of $180,000. The actual closing costs are listed below. Closing Cost Charge Loan origination $345 Title insurance $600 Attorney's fees $1,350 Appraisal $480 Inspection $550 Recording fees $175 Escrow $1,900 Evaluate the lender's good faith estimate. a. The lender made an excellent estimate; it was equal to the actual closing costs. b. The lender made a very good estimate; it was within 0.25% of the actual closing costs. c. The lender made a fairly good estimate; it was between 0.25% and 0.5% of the actual closing costs. d. The lender made a poor estimate; it was higher than 0.5% of the actual closing costs.

Question

Mathematics

Elena Rush

14 February, 15:40

A lender estimates the closing costs on a home loan will be 3% of the loan amount of $180,000. The actual closing costs are listed below. Closing Cost Charge Loan origination $345 Title insurance $600 Attorney's fees $1,350 Appraisal $480 Inspection $550 Recording fees $175 Escrow $1,900 Evaluate the lender's good faith estimate. a. The lender made an excellent estimate; it was equal to the actual closing costs. b. The lender made a very good estimate; it was within 0.25% of the actual closing costs. c. The lender made a fairly good estimate; it was between 0.25% and 0.5% of the actual closing costs. d. The lender made a poor estimate; it was higher than 0.5% of the actual closing costs.

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Answers (2)

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Max Clements · Answer 1

3% of the loan amount of $180,000 is equal to:

estimated closing cost = 0.03 * $180,000

estimated closing cost = $5,400

The total actual closing cost is:

actual closing cost = $345 + $600 + $1,350 + $480 + $550 + $175 + $1,900

actual closing cost = $5,400

So the answer is:

a. The lender made an excellent estimate; it was equal to the actual closing costs.

Archie · Answer 2

a. The lender made an excellent estimate; it was equal to the actual closing costs.