Question

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.

Answer 1

Estimated total = 180 + 365 + 795 + 300 + 120 + 980 = $2,740
Actual total = 180 + 340 + 830 + 375 + 150 + 1,000 = $2,875
Difference = $2,875 − $2,740 = $135

Percentage of loan = 135 / 90,000 = 0.0015 = 0.15%

0.15% is within 0.25%, so answer: a.