Question

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

Answer 1

Answer: $3200

Explanation:

Given: Purchasing price of property = $400,000.

loan-to-value ratio = 80% = 0.80

∵ loan-to-value ratio = (loan amount)  ÷( Value of property)

⇒ 0.80 =  (loan amount)  ÷ (400000)

⇒ Loan amount = 0.80  x 400000 =$ 320,000

Origination fee = 1% of (Loan amount )

=  0.01 x ( 320000)

= $3200

Hence, the loan origination fee = $3200