Who is responsible for loan closing fees according to the principal amount of the loan?

• A. The lender only
• B. The borrower only
• C. Both the lender and borrower
• D. Escrow accounts

Answer: (B)

The borrower is typically responsible for loan closing fees, which are often tied to the principal amount of the loan. These fees can include various costs such as origination fees, title insurance, recording fees, and appraisal fees, all of which are essential for processing the loan and finalizing the purchase of the property.

The closing costs can vary significantly based on the loan amount, meaning that a higher principal amount may result in higher overall closing costs. Therefore, it's generally the borrower who must budget for these expenses when obtaining a mortgage, as they are the ones receiving the loan and are responsible for the associated costs of securing that loan.

In certain cases, these fees may be negotiated or covered by the lender as part of a promotional incentive, but ultimately, the borrower is expected to account for these expenses when planning for the loan transaction.