What is an origination fee when getting a loan?

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What is an origination fee when getting a loan?

• Nathan Carlisle

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The Origination Process
The origination process is initiated when a
borrower submits all necessary information that
is lender- requested during the application
process.  The lender will provide the borrower
with paperwork and various formssome of which
are electronicthat must be filled out to
authenticate personal income, employment, assets,
debts, credit history etc.  Once the lender
gathers the borrowers information, he or she
will oversee and facilitate the continuation of
the origination process.
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The Origination Fee - What It Is
As mentioned, origination fees are an upfront
payment that is charged by the lender or mortgage
broker as compensation for services rendered for
loan-application processing.  The amount that is
calculated utilizes a certain percentage of
between 0.5 and 1 of the total loan amount.  If
we use an origination fee of 0.5, a 100,000
loan would generate an origination fee of 500.00
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Origination Fees - Know What You Are Paying For
The origination process incorporates a variety of
administrative activities including taking and
processing the loan application, underwriting the
loan, funding the loan and more.  Its very
important that you, as a borrower, become
familiar with each origination fee you will find
listed on your Good Faith Estimate and Settlement
Statement.  You lender should provide you with a
hardcopy of the Good Faith Estimate but if not,
be sure to request one.
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