Other Costs of Buying a Home Answers

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Mr. and Mrs. Chavez close on a 30 year home loan for $250,000. The monthly payment with no points is $1,580, but if they buy a point it is $1,560. What might you infer if Mr. and Mrs. Chavez choose not to buy a point?

A
They plan to sell the house at the end of 5 years.
B
They plan to sell the house at the end of 10 years.
C
They plan to sell the house at the end of 15 years.
D
They plan to stay in the house at least 30 years.
5

A lender estimates the closing costs on a home loan will be 3.75% of the loan amount of $120,000. The actual closing costs are listed below. Closing Cost Charge Loan origination $300 Title insurance $600 Attorney’s fees $1,250 Appraisal $550 Inspection $525 Recording fees $125 Escrow $2,000 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 off by more than 0.5% of the actual closing costs.
6

A lender estimates the closing costs on a home loan will be 3.75% of the loan amount of $120,000. The actual closing costs are listed below. Closing Cost Charge Loan origination $300 Title insurance $600 Attorney’s fees $1,250 Appraisal $550 Inspection $525 Recording fees $125 Escrow $2,000 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 off by more than 0.5% of the actual closing costs.
8

A lender estimates the closing costs on a home loan of $90,000 as listed below. Closing Cost Charge Loan origination $180 Title insurance $365 Attorney’s fees $795 Inspection $300 Recording fees $120 Escrow $980 The actual closing costs were: Closing Cost Charge Loan origination $180 Title insurance $340 Attorney’s fees $830 Inspection $375 Recording fees $150 Escrow $1,000 Evaluate the lender's good faith estimate as a percentage of the loan amount.

A
The lender made a very good estimate; it was within 0.25% of the actual closing costs.
B
The lender made a fairly good estimate; it was between 0.25% and 0.5% from the actual closing costs.
C
The lender made a somewhat poor estimate; it was between 0.25% and 0.5% from the actual closing costs.
D
The lender made a very poor estimate; it was between 0.5% and 0.75% from the actual closing costs.
11

A lender estimates the closing costs on a home loan of $90,000 as listed below. Closing Cost Charge Loan origination $180 Title insurance $365 Attorney’s fees $795 Inspection $300 Recording fees $120 Escrow $980 The actual closing costs were: Closing Cost Charge Loan origination $180 Title insurance $340 Attorney’s fees $830 Inspection $375 Recording fees $150 Escrow $1,000 Evaluate the lender's good faith estimate as a percentage of the loan amount.

A
The lender made a very good estimate; it was within 0.25% of the actual closing costs.
B
The lender made a fairly good estimate; it was between 0.25% and 0.5% from the actual closing costs.
C
The lender made a somewhat poor estimate; it was between 0.25% and 0.5% from the actual closing costs.
D
The lender made a very poor estimate; it was between 0.5% and 0.75% from the actual closing costs.
14

Describe what a loan discount point is and what effect it has on a home loan.

Answer:

A loan discount point is an upfront fee, usually 1% of the loan amount, paid at closing. It generally reduces the interest rate and monthly payment, but increases the borrower’s closing costs.

16

Mr. and Mrs. Chavez close on a 30 year home loan for $250,000. The monthly payment with no points is $1,580, but if they buy a point it is $1,560. What might you infer if Mr. and Mrs. Chavez choose not to buy a point?

A
They plan to sell the house at the end of 5 years.
B
They plan to sell the house at the end of 10 years.
C
They plan to sell the house at the end of 15 years.
D
They plan to stay in the house at least 30 years.

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