You are evaluating two loan options for a home purchase. Both are $1,000,000 monthly constant payment mortgages, amortized over 30 years. Loan 1: 7% interest rate with no origination fee Loan 2: 6.9% interest rate with an origination fee Based on what you learned in your Real Estate Finance and Investments course, you calculate that the effective annualized cost of these loans are exactly the same if you refinance the loans after 3 years (36 months). What is the origination fee of Loan 2? A. $8,000 (0.8 point) B. $11,000 (1.1 point) C. $2,600 (0.26 point) D. $20,300 (2.03 point) E. $5,500 (0.55 point)

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To determine the origination fee of loan 2 we need to calculate the cost of the loan over the 36 mon... View the full answer