Finance
A lender's 'origination fee' is charged to:
APay for the property appraisal
BCover the lender's costs for processing and underwriting the loan✓ Correct
CFund the escrow account
DPay for the title search
Explanation
An origination fee is charged by the lender to cover the cost of processing, underwriting, and closing a mortgage loan. It is typically expressed as a percentage of the loan amount.
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Key Terms to Know
Loan-to-Value Ratio (LTV)
The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
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