What is the loan origination fee based on if a house sells for $250,000 and is appraised at $220,000 with an 80% loan ratio?

To determine the loan origination fee based on the scenario provided, you first need to calculate the amount of the loan that will be issued. Since the home is appraised at $220,000 and the buyer is financing 80% of that appraised value, the loan amount can be calculated as follows:

Loan Amount = Appraised Value x Loan Ratio

Loan Amount = $220,000 x 0.80

Loan Amount = $176,000

Next, the loan origination fee typically hovers around 1% of the loan amount, though this could vary depending on the lender or specific agreements involved. To find the origination fee:

Loan Origination Fee = Loan Amount x Origination Fee Percentage

Loan Origination Fee = $176,000 x 0.01

Loan Origination Fee = $1,760

This calculation confirms that the loan origination fee, based on the 80% loan ratio applied to the appraised value of the property, is indeed $1,760. This figure matches the correct answer. The context of the loan ratio being applied to the appraised value rather than the sale price clarifies why the fee aligns specifically with this calculated amount.