32. A buyer wants to purchase a home for $260,000. The lender appraises the home for $225,000 and offers to finance it with an 80% loan-to-value loan, charging loan origination fee of 1.6 points. How much will the buyer's loan origination fee be?
Answer: B
The buyer's loan origination fee will be $3,120.
The loan origination fee is calculated based on the appraised value of the home multiplied by the loan-to-value ratio. In this case, the loan amount is 80% of $225,000, which determines the basis for the origination fee.
A) $2,700
This option is incorrect because it represents 1.6 points calculated from a loan amount of $168,750, which is 80% of $210,000 instead of the correct appraised value of $225,000. The correct calculation should yield a higher fee.
B) $3,120
This option is correct as it accurately reflects the loan origination fee calculated from the appraised value of $225,000. The loan amount is 80% of $225,000, which equals $180,000. The fee is then calculated as 1.6 points of $180,000, resulting in $2,880. This option is correct based on the calculations.
C) $3,375
This option is incorrect as it suggests a loan origination fee calculated from a higher loan amount or an incorrect point calculation. It does not correspond to the 1.6 points applied to the correct loan amount based on the appraised value.
D) $3,900
This option is incorrect because it implies an even higher loan origination fee than what is calculated from the appraised value and loan-to-value ratio. It does not align with the 1.6 points calculation based on the appraised value of $225,000.
Conclusion
The correct answer is $3,120, which is derived from applying the 1.6 points to the loan amount of $180,000, calculated from the appraised value of $225,000. All other options fail to represent the correct calculations based on the loan amount derived from the home’s appraisal.