House is sold for $250,000 and the lender's appraiser valued the property at $220,000. Based on an 80% loan ratio and a one-point origination fee, how much is the loan origination fee?

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Multiple Choice

House is sold for $250,000 and the lender's appraiser valued the property at $220,000. Based on an 80% loan ratio and a one-point origination fee, how much is the loan origination fee?

Explanation:
In mortgage financing, the loan amount is typically based on the loan-to-value ratio applied to the appraised value (the lower of purchase price or appraisal, when the appraisal is involved). Here, the appraised value is 220,000, and the loan-to-value ratio is 80%, so the maximum loan amount is 0.80 × 220,000 = 176,000. A loan origination fee is charged as points, with one point equaling 1% of the loan amount. Therefore, the origination fee is 1% of 176,000 = 1,760.

In mortgage financing, the loan amount is typically based on the loan-to-value ratio applied to the appraised value (the lower of purchase price or appraisal, when the appraisal is involved). Here, the appraised value is 220,000, and the loan-to-value ratio is 80%, so the maximum loan amount is 0.80 × 220,000 = 176,000. A loan origination fee is charged as points, with one point equaling 1% of the loan amount. Therefore, the origination fee is 1% of 176,000 = 1,760.

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