A lender charges a borrower 1.5% of the loan amount as an origination fee on a $300,000 loan. What is the origination fee?
Correct Answer
B) $4,500
Origination fees are calculated as a percentage of the loan amount. 1.5% × $300,000 = $4,500. This fee compensates the lender for processing and underwriting the loan.
Why This Is the Correct Answer
Origination fees are calculated as a percentage of the loan amount. 1.5% × $300,000 = $4,500. This fee compensates the lender for processing and underwriting the loan.
More Mortgage Knowledge Questions
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A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
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