A buyer in Douglas County, Colorado is purchasing a home for $480,000. She is obtaining a conventional loan with a 20% down payment. The lender charges a loan origination fee of 1% of the loan amount and a separate processing fee of $800. What is the total amount the buyer will pay in lender fees at closing?
Correct Answer
B) $4,640
Step 1: Calculate the loan amount. Purchase price = $480,000. Down payment = 20% × $480,000 = $96,000. Loan amount = $480,000 − $96,000 = $384,000. Step 2: Calculate the origination fee. Origination fee = 1% × $384,000 = $3,840. Step 3: Add the processing fee. Total lender fees = $3,840 + $800 = $4,640.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
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