Real Estate Math
A buyer in Minnesota obtains a $320,000 mortgage. The lender charges a 1% origination fee and 1.5 points. What is the total cost of these fees?
A$6,400
B$8,000✓ Correct
C$4,800
D$7,200
Explanation
Origination fee = $320,000 x 1% = $3,200. Discount points = $320,000 x 1.5% = $4,800. Total = $3,200 + $4,800 = $8,000. Origination fees compensate the lender for processing the loan; discount points are prepaid interest used to buy down the interest rate.
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