Real Estate Math
A lender charges 2 origination points plus $1,500 in other fees on a $225,000 loan. What are the total upfront loan costs?
A$6,000✓ Correct
B$4,500
C$5,100
D$3,000
Explanation
Points = $225,000 × 2% = $4,500. Total = $4,500 + $1,500 = $6,000.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
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