The correct answer is A, $2,340.
First calculate the loan amount:
$260,000 × 90% = $234,000
The lender ' s origination fee equals 1% of the mortgage principal:
$234,000 × 1% = $2,340
Therefore A is correct.
The most common mistake is calculating the 1% fee against the $260,000 purchase price rather than the amount actually financed.
The purchaser ' s down payment is:
$260,000 × 10% = $26,000
which leaves $234,000 financed.
Mortgage origination charges compensate the lender or originator for loan-related processing and origination services according to the particular transaction. Candidates should distinguish origination charges from discount points, property taxes, mortgage insurance, appraisal fees, title charges, and prepaid interest.
Massachusetts Board financing curriculum specifically includes loan-to-value ratios, loan terms, closing expenses, and mortgage financing analysis.
Study Guide Reference: Financing/Real Estate Calculations — Loan-to-Value and Origination Fees.
