Origination Fee
The lender's charge for processing the loan application and underwriting the file, expressed as a percentage of the loan amount or a flat dollar amount.
Origination fees compensate the lender for the work of creating the loan, taking the application, ordering verifications, underwriting, drawing documents, and funding. They typically range from 0.5% to 1% of the loan amount, sometimes higher on smaller loans where percentage-based fees underprice the real cost of work.
The origination fee is one of the most important costs to compare between Loan Estimates. Two lenders may quote identical rates but very different origination fees, and the difference flows straight through to your cash to close.
Some lenders structure pricing with low or zero origination fees but offset that by charging more in other fee categories, administration, processing, underwriting fees, or by quoting slightly higher rates. The total of all lender charges is what matters, not the line item labeled origination.
Related terms
Other terms you'll see alongside Origination Fee
The standardized three-page disclosure a lender must provide within three business days of a complete loan application.
A blended figure that combines the note rate with most upfront loan costs to express the true yearly cost of borrowing.
The collection of fees and prepaid items, separate from the down payment, that a borrower pays at closing.
Prepaid interest paid at closing to permanently lower the loan's interest rate.
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