Definition of Origination fee:
A mortgage origination fee is an upfront fee charged by a lender to process a new loan application. The fee is compensation for executing the loan. Loan origination fees are quoted as a percentage of the total loan, and they are generally between 0.5% and 1% of a mortgage loan in the United States.
Charge imposed by a lender on a borrower to cover costs associated with handling of a mortgage loan application. These costs include those of credit check and title search and, in some instances, are equated with interest and may be tax deductible.
Sometimes referred to as “discount fees” or “points,” particularly when they equal 1% of the amount borrowed, origination fees pay for services such as processing, underwriting, and funding.
How to use Origination fee in a sentence?
- Origination fees are sometimes negotiable, but reducing them or avoiding them usually means paying a higher interest rate over the life of the loan.
- These fees are typically set in advance of the loan execution, and they should not come as a surprise at the time of closing.
- An origination fee is typically 0.5% to 1% of the loan amount and is charged by a lender as compensation for processing a loan application.
Meaning of Origination fee & Origination fee Definition