A buyer purchases a $500,000 property with 20% down. The lender charges a 1% origination fee and 2 discount points on the loan amount. How much does the buyer owe in total upfront loan fees?
Correct Answer
B) $12,000
Step 1: Loan amount = $500,000 × 80% = $400,000. Step 2: Origination fee = $400,000 × 1% = $4,000. Step 3: Points = $400,000 × 2% = $8,000. Step 4: Total = $4,000 + $8,000 = $12,000.
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