The cost of these expenses is $3,600.
Given,
A $120,000 house is up for sale, and the buyer plans to buy it.
She is granted an 85% loan.
The lender levies a loan origination fee of 1.5 percent.
1.5 discount points.
The expense will include both loan origination fees and discount points.
Therefore, cost of expense will include the cost of undertaking the above-mentioned expenses.
cost of expense = (1.5% loan origination fee + 1.5 discount points) × purchase price of the house
cost of expense = 3% × purchase price of the house
Substituting the value of the purchase price of house in the formula we get,
cost of expense = 3% × $1,20,000
= $3,600
Hence, the cost of these expenses is $3,600.
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