James is purchasing a home in Lake Oswego, Oregon for $600,000. He makes a 20% down payment and finances the remainder with a conventional loan secured by a trust deed. His lender charges a loan origination fee of 1% of the loan amount. What is the total amount of James's loan origination fee?
Correct Answer
A) $4,800
Step 1 — Calculate the down payment: $600,000 × 20% = $120,000. Step 2 — Calculate the loan amount: $600,000 − $120,000 = $480,000. Step 3 — Calculate the origination fee: $480,000 × 1% = $4,800. The origination fee is calculated on the loan amount (the amount financed), not the purchase price. James's loan origination fee is $4,800.
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