What is An Origination Fee When Getting a Loan?

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What Is An Origination Fee When Getting A Loan?

• Dunhill Homes

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Introduction
Here is another term that is part of real-estate
lingo that you may, or may not have, heard
before  Origination Fee.  An origination fee has
to do with origination and origination
points but lets first explain what
origination means as it applies to home loans.
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What Is Origination?
The term origination refers to the origination
process a borrower will agree to become a part
of when he or she submits all required personal
information necessary to apply for a home loan. 
The submission of the paperwork to substantiate
income, employment, assets, debts etc. is part of
the process to create/initiate/originate a home
loan.  This becomes the origination process that
is overseen and facilitated by a mortgage
lender.  That same lender will analyze the
borrowers personal information (via official
forms) to determine what type of loan (if any)
the borrower will become preapproved for.  During
the origination process, the lender will inform
the pre-approved borrower of the specific loan
terms and the corresponding interest rate the
borrower may choose to accept.
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So, What Are Origination Fees?
Now we get back to the term origination fees. 
Origination fees, as you may have surmised at
this point, are an upfront feecompensationthat
is charged by the lender or mortgage broker for
loan-application processing.  Origination fees
are calculated as a percentage of the total loan
and, typically, amount to around 0.5 to 1 of a
mortgage loan using 1 as the figure, a 100,000
loan could generate an origination fee of 1,000
for the lender It is not uncommon for lender to
offer more leeway for increased negotiations with
the amount of the origination fee when dealing
with more hefty loans since lenders want to do
everything possible to close on loans that are
larger.
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ation-fee-when-getting-a-loan/