1. What is the amount financed?
2. What is the interest on the amount financed?
3. What other interest would be paid?
If you don't understand origination fees, discount points, or mortgage factor you should start there. Once you know what those are and how to apply them the problem becomes easy.
If someone could show me the steps for this problem I would really appreciate it!
A buyer is purchasing a townhouse for $280,800 with a 90% LTV 30 year loan. The buyer is considering 2 lenders. Lender 1 is offering a 6.75% loan with 1% origination and no discount points and a mortgage factor of 6.49. Lender 2 is offering a 6.25% loan with 1% origination and 2 discount points and a mortgage factor of 6.16. What is the difference in the total interest that would be charged over the life of the two loans rounded to the nearest hundred?
A:25,000
