For the purposes of estimating the effective borrowing cost (EBC), only those up-front expenses associated with obtaining the mortgage should be included, not the settlement costs associated with obtaining ownership of the property. With this in mind, which of the following costs should not be included in one's calculation of EBC?
A. Discount points
B. Loan origination fees
C. Appraisal fee
D. Buyer's title insurance

The correct answer is D. Buyer's title insurance.

Explanation:

When you buy a home, you receive a document that is usually called a deed, which indicates that the seller legally transferred the property, or the "title" of that home. Title insurance can protect you if someone later files a lawsuit and says they have a claim against the home since before you bought it. The most common claims are usually filed because the previous owner did not pay the taxes or because certain contractors did not charge for work done on the home before you bought it.

Most lenders require the buyer a title insurance policy for the lender, which protects the amount that the lender lends. You may want to buy a title insurance policy for the owner, which can help you protect your financial investment at home.

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