When comparing loan products, an MLO shows a borrower that a no-closing-cost loan has a higher interest rate than a loan with closing costs. This is an example of:
Correct Answer
B) Proper disclosure of rate/cost trade-offs
Showing borrowers different loan structures with varying combinations of rates and costs is proper loan comparison practice. No-closing-cost loans typically have higher rates to compensate for the lender paying closing costs, and this trade-off should be clearly explained.
Why This Is the Correct Answer
Showing borrowers different loan structures with varying combinations of rates and costs is proper loan comparison practice. No-closing-cost loans typically have higher rates to compensate for the lender paying closing costs, and this trade-off should be clearly explained.
More Origination Questions
A borrower has a construction-to-permanent loan with a 12-month construction phase. At month 10, construction is only 60% complete due to delays. What is the most likely outcome?
For a construction-to-permanent loan, when must the initial Closing Disclosure be provided for the construction phase?
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