Finance
What is the difference between a 'loan origination fee' and 'discount points' in an Oregon mortgage?
ABoth are identical charges at different times
BAn origination fee compensates the lender for processing the loan; discount points are prepaid interest paid to reduce the interest rate✓ Correct
CDiscount points are charges to increase the loan amount; origination fees decrease it
DOrigination fees are only charged on commercial loans; discount points on residential
Explanation
A loan origination fee is the lender's charge for processing and underwriting the loan. Discount points are prepaid interest — each point equals 1% of the loan amount and typically reduces the interest rate by a fraction (e.g., 0.25%). Discount points may be tax-deductible. Both are closing costs disclosed on the Loan Estimate under TRID.
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