What Are Origination Fees and Can They Be Avoided?

An origination fee is part of the multi-step process of getting a loan and includes the cost of processing the application, underwriting, and financing the loan. The lender may combine the fees into one charge or may list each one individually.

Jan 13, 2021

Either way, origination fees are separate from your mortgage down payment and are often paid as part of your closing costs.

What Do Origination Fees Cover?

Loan processing, such as reviewing your application and preparing documents.
Underwriting, such as gathering and verifying your information, including your credit score.
Loan Funding, such as "points" that lower your interest rate

How To Determine the Cost of Your Mortgage Origination Fee

The typical origination fee is between 0.5% and 1% of the total loan amount. Several factors affect your exact fees. Unfortunately, we cannot give you the formula to figure out your costs as each lender uses slightly different criteria to determine them.

However, the largest contributing factors that determine the costs are the loan amount and your credit score --the higher the score, the lower the origination fees.

Can Origination Fees Be Avoided?

Origination fees must be paid — but not necessarily by you. The home seller may be willing to pay your fees if:

The home's been on the listed for a while
They haven't received any offers
The property is rundown
They're in a hurry to sell and cash out quickly

Lenders sometimes cover origination fees, too. Note that although this could mean paying less upfront, it might come at the cost of a higher interest rate. Consider what's most important to you before negotiating origination fees.

Also, keep in mind that some loan fees are unavoidable, such as:

Appraisal
Credit report
Tax service
Flood certification
Wire transfer
Courier service
Title insurance
Escrow/signing fee
Recording

Summary

Loan origination fees are tricky because each lender calculates differently, and those differences may not always be clear. Transparency and simplicity are foundational to our process, and we welcome all your questions about how we calculate origination fees.

In the market for a mortgage? Pre-qualify online today and get an obligation-free quote of how much you qualify for and how much your monthly payment will be!

Customer service is very important to us. As we continue to improve and expand our services, we recognize our customers' need and desire to preserve their privacy and confidentiality. Safeguarding our customers' privacy is also very important to us. We have adopted standards that help maintain and preserve the confidentiality of customers' nonpublic personal information. The following Statement affirms our continued efforts to safeguard customer information.

Information We Collect

We gather nonpublic personal information about our customers as may be necessary to conduct business with our customers. We collect nonpublic personal information about you from the following sources:

Information we receive from you on applications or other forms, over the telephone or in face-to-face meetings, and via the Internet. Examples of information we receive from you include your name, address, telephone number, social security number, credit history and other financial information.

Information about your transactions with us or others. Examples of information relating to your transactions include payment histories, account balances and account activity.

Information we receive from a consumer reporting agency. Examples of information from consumer reporting agencies include your credit score, credit reports and other information relating to your creditworthiness.

From employers and others to verify information you have given to us. Examples of information provided by employers and others include verifications of employment, income or deposits.

Information We Disclose

Your personal information will only be retained for the purpose of providing you with our response to your query and will not be made available to any third party except as necessary to be disclosed to any related entity for the purpose intended or as required to be disclosed under law.

By submitting data on our website, the visitor is providing explicit consent to transmission of data collected on the website.

We treat data as confidential within our firm and require a strict adherence of all our employees to data protection and our confidentiality policies.

All visitors, however, should be aware that our website may contain links to other sites that are not governed by this or any other privacy statement.