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Answered Same Day Apr 20, 2021

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Ambily answered on Apr 21 2021

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Brueggman Text Chapter 4
1. Loan closing costs are the various costs incu
ed to finalize a loan. They typically range from 2% to 5% of the loan principal.
The categories of loan closing costs are as below:
a. Origination fees: The fees charged by the lender for recovering the administrative costs for initiating a loan.
. Application fees: The fees charged for processing the documentation of the loan application.
c. Appraisal fees: A licenced professional assesses the worth and market value of the asset for which the loan is being taken. The lender extends the loan only on the basis of the appraisal report.
d. Credit Report fees: The fees charged by the lender for the expenses incu
ed by them to check the credit score of the bo
ower and to obtain a credit report.
e. Attorney fees: The fees charged by an attorney to prepare and review the various agreements and contracts relating to the purpose of the loan.
2. Origination fees are the those the lender charges upfront as a percentage of the total loan amount to process a new loan application. It is charged to cover the upfront administrative costs incu
ed by the lender during the origination of the loan. The underwriting fees paid for verifying and evaluating the application, the
okerage which the lender may need to pay, all form part of the origination fees.
Loan discount fees are charged by the lender for giving discounted loan rates to the bo
ower as compared to the market rate. The bo
owers are benefitted by lower interest payments in the future payments to the lender.
3. Using the PMT function in Excel, the fixed monthly payment for the 10-year (120 months) mortgage loan of $125K at the rate of 11% comes to $1721.9
    Number of periods
     120
    Interest rate (annual)
    11%
    Interest rate (monthly)
    0.92%
    Loan Amount ($)
     1,25,000


    Monthly...

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