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A+buyer+is+purchasing+a+property+for+$400,000.+his+loan-to-value+ratio+is+80%.+the+lender+also+charges+a+one-point+loan+origination+fee.+how+much+is+the+loan+origination+fee?

Sagot :

The total loan origination fee is $3,200.

Calculating,

Property bought for = $400,000

Loan-to-value ratio = 80%

So, [tex]400,000[/tex] x  [tex]\frac{80}{100}[/tex] = 320,000

Origination fee percentage = 1%

Therefore, [tex]320,000[/tex] × [tex]\frac{1}{100}[/tex] = $3,200

A fee paid to a lender to process a loan application is known as an origination fee (also known as an origination "point"). The borrower consents to give the lender this advance payment to set up the loan or mortgage. A lender typically charges an origination fee of 0.5% to 1% of the loan amount in exchange for processing a loan application. Although origination fees are occasionally negotiable, doing so typically results in a higher interest rate over the course of the loan. Although a loan origination fee is typically paid upfront with loan funds, you can consider it to be a part of the total cost of the loan.

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