A lender believes 6% is a competitive yield on a 75% loan to value mortgage for 30 years and that other lenders are pricing loans of a similar nature at that rate. If the lender wants to earn a yield higher than the competitors in the market and wants to receive 7% and believes the borrower will repay the loan at the end of 10 years, how much discount points should he charge the borrower at loan origination? (Assume a notional amount of $100,000 is the 75% being borrowed. State your final answer rounded to 2 decimals)

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To calculate the discount points that the lender should charge the ... View the full answer