If the Pickets are purchasing a home for $780,000 with a 90% loan at 5% interest and a 2% loan origination fee, what is the loan origination fee they must pay?

To calculate the loan origination fee, first determine the amount of the loan based on the home purchase price and the percentage financed through the loan. The Pickets are purchasing a home for $780,000, and they will be financing 90% of this amount.

Calculating 90% of $780,000 gives:

[ 0.90 \times 780,000 = 702,000 ]

This means the loan amount will be $702,000. Next, the loan origination fee is typically calculated as a percentage of the loan amount. In this case, there is a 2% loan origination fee.

To find the fee amount:

[ 0.02 \times 702,000 = 14,040 ]

Thus, the total loan origination fee they must pay is $14,040. This amount directly correlates with the correct calculation involving both the loan percentage and the percentage fee assessed on that loan. Therefore, the answer reflects a proper understanding of how to calculate the loan origination fee based on the initial purchase price and financing terms.