You are a bank loan officer contemplating what terms to offer on a potential loan. The borrower is requesting a loan amount of $225,000, and a term of 30-years. The current market rate on such loans to borrowers with this credit profile is 6.25%, but you have been instructed to anticipate an increase in market rates to 7.5% in the near future. If you want to keep the note (or stated) rate for this loan at 6.25%, what origination fee should be charged in order to raise the effective yield to 7.5%?

Answer rating: 100% (QA)

The origination fee should be a charge to yield the same ... View the full answer