Question

Tim gets a 80% loan on a $100,000 property and is charged a 1 point origination fee. He is also charged a $35 credit report fee and a $450 appraisal. How much must Tim come to settlement with to then close the deal?

(a) $21, 285
(b) $1,485
(c) $100,485
(d) $1,285

Answer 1

Tim must come to settlement with $81,285. This includes an $80,000 loan amount, a $800 origination fee (1% of the loan amount), a $35 credit report fee, and a $450 appraisal fee.

This correct answer is (a)

Step-by-step explanation:

Certainly, let's break down the costs step by step:

Loan Amount:

Tim gets an 80% loan on a $100,000 property. To find the loan amount, we calculate 80% of $100,000:

0.80 \times $100,000 = $80,000

Origination Fee:

Tim is charged a 1 point origination fee. One point is equal to 1% of the loan amount. Therefore, the origination fee is 1% of $80,000:

0.01 \times $80,000 = $800

Credit Report Fee:

Tim is charged a $35 credit report fee.

Appraisal Fee:

Tim is charged a $450 appraisal fee.

Now, add up these costs to find out how much Tim must come to settlement with:

Loan Amount+Origination Fee+Credit Report Fee+Appraisal Fee

$80,000 + $800 + $35 + $450 = $81,285

It seems there was a mistake in my previous response. I apologize for the confusion. The correct total is $81,285, not $100,485.

So, the correct answer is (a) $81,285.

This correct answer is (a)