A buyer wants to purchase a home for $60,000. The lender appraises the home for $58,000 and offers to finance it with an 80% loan-to-value loan, charging a loan origination fee of 1.5 points. How much will the buyer's loan origination fee be?

Loan origination fee = $696

Explanation:

Given:

Home value = $58,000

Loan-to-value loan = 80%

Loan origination fee = 1.5 points = 1.5%

Find:

Loan origination fee = ?

Computation:

Total loan amount = Home value × Loan-to-value loan

Total loan amount = $58,000 × 80%

Total loan amount = $46,400

Loan origination fee = Total loan amount × 1.5%

Loan origination fee = $46,400 × 1.5%

Loan origination fee = $696

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