What is a Loan Origination Fee?

An Origination fee is payable by the borrower to the lender at closing for completing and closing the loan. There are several fees required to be paid in conjunction with the mortgage loan. It's important as a consumer to have a clear understanding of what you're being charged and why.

Origination fees are usually a small percentage of the loan amount ranging from .5 to 2 percent. Mortgage Brokers, as third party lenders, can be paid by both the borrower and the lender that will disperse the funds. Not all brokers charge origination fees. A wise consumer can negotiate with the broker to lower the fees if they feel they are excessive.

Disclosure

The fee must be disclosed to the borrower, up front, with the initial good faith estimate. According to federal law the consumer must receive a copy of the good faith estimate within 3 days of the initial application. Not only are there several state and federal guidelines the loan officer must follow, but there is a lot of work required to get the loan closed. However, it is up to the consumer to decide if it's worth the money to proceed with the loan request.



Loan Application Fee



The loan application fee is a fee charged by a lender in order to be compensated for the process of handling a loan application. In most cases, this type of fee is charged when an individual applies for a loan. This is a standard fee that most lenders will charge, although, sometimes, the fee will be waived. This fee is generally used to cover the costs that are incurred by the lender when processing an application. For example, the lender will have to pay something for the credit check as well as pay the wages of the loan processor.

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