A lender estimates the closing costs on a home loan of $50,000 as listed below. If the lender's good faith estimates are accurate, are they a reasonable amount for closing costs? Why or why not?

They are not a reasonable amount since the total estimated costs were $3,100 which represents 6.2% of the total mortgage loan. That number is way too high, usually closing costs are between 3-5% maximum of the mortgage loan.

Explanation:

Closing Cost                  Charge

Loan origination              $200

Title insurance                 $530

Attorney's fees                $600

Appraisal                          $265

Inspection                       $575

Recording fees               $130

Escrow                             $800

total closing costs estimated by the lender = $3,100 which represent 6.2% of the mortgage loan

c.    No, because the lender estimated 6.2% of the home loan in closing costs which does not fall between 3 - 5%.

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