Finance
The 'loan origination fee' charged by a Virginia lender at closing is:
ATax deductible in all cases
BA fee charged by the lender for processing the loan, typically 0.5–1% of the loan amount✓ Correct
CPaid monthly over the loan term
DProhibited by RESPA
Explanation
A loan origination fee (origination charge) compensates the lender for processing the mortgage application. It is a one-time upfront fee and appears on the Loan Estimate and Closing Disclosure.
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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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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