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Origination Fee

Mortgage Library: Ask a Mortgage Related Question: Answers: Origination Fee

Question:

I want to know how much will be origination fee for 73.000.

B. M.
Aurora
Colorado

Answer:

Hi B.,

The truth is, there is no set fee that an Origination Fee will be. Traditionally, an origination fee is 1% of the loan amount. For $73,000 that would $730. 

There is no rule that the origination must be 1%, and may be anything that the lender wishes to charge. I have seen .5%, 1%, 2%, and I've seen fixed dollar amounts that have no attachment to the loan amount.

The origination fee is one form of compensation the loan provider makes for obtaining a loan. I have seen many lenders make the claim that they don't charge an origination fee, but don't mention that they do charge a discount. Discount is a flexible term as well, since I've seen it used to buy down a rate, but also as pure revenue. It's the item that appears on the line following the origination fee.

I will note that $730. is not very close to the average compensation a loan originator makes on a loan in the metro area. It's not out of the question, but it's below the average which I believe to be near $3,200 for average loans and maybe $1,800 on small loans. I would advise taking into account other revenue sources such as the loan discount, application fee, processing fee, or commitment fee, that may appear when you evaluate offers.

Regards,

Deron J White
Mortgage Consultant

D. White & Co. LLC
http://www.YieldSpreadCredit.com
800-590-4483 Office
720-365-0646 Mobile

E-Mail: deron  'at'  dwhite.com


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