Loan Officer Practice Exam 2026 – Comprehensive All-in-One Guide for Exam Success!

Question: 1 / 415

Where should hazard insurance premiums be estimated on a Loan Estimate?

Origination Charges

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Prepaids

Hazard insurance premiums should be estimated under Prepaids on a Loan Estimate. This category is designed to account for costs that the borrower is required to pay upfront, which will cover future expenses. Since hazard insurance is typically paid in advance to ensure coverage from the beginning of the mortgage term, it accurately fits into this section, allowing borrowers to see how much they need to set aside for this critical insurance upfront.

Prepaids also include other insurance and property taxes, which provides a comprehensive view for borrowers regarding all necessary payments that need to be made in advance. Therefore, placing hazard insurance premiums here helps borrowers understand their total closing costs and ongoing monthly budget better, ensuring they are financially prepared for all obligations associated with their mortgage.

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