Mortgage Loan Originator (MLO) Licensing Practice Test 2025 – Your All-in-One Guide to Exam Success!

Question: 1 / 605

Average charges may not be used for which of the following?

Home Inspections

Credit Reports

Insurance

Average charges cannot be used for insurance because insurance costs can vary significantly based on numerous factors such as the type of insurance (e.g., homeowner's insurance, title insurance), coverage limits, the individual circumstances of the borrower, and the specifics of the property being insured. This variability necessitates that lenders provide a precise cost for insurance rather than applying an average, ensuring that borrowers are accurately informed of their actual financial obligations.

In contrast, home inspections, credit reports, and appraisals tend to have established industry standards and consistent pricing structures that can be sufficiently averaged across typical transactions. This allows lenders to use average charges for these services, helping streamline the cost estimation process for borrowers.

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Appraisals

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