Real Estate Math
A Minnesota buyer borrows $285,000. The lender charges a 1.25% origination fee. What is the origination fee in dollars?
A$3,562.50✓ Correct
B$2,850
C$2,500
D$4,200
Explanation
Origination fee = Loan amount x Origination fee rate = $285,000 x 0.0125 = $3,562.
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Key Terms to Know
Discount Points
Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
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.
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.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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