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Loan Origination Fees

Mortgage Library: Ask a Mortgage Related Question: Answers: Loan Origination Fees

Question:

What is a reasonable percentage rate for a broker to ask to be paid for originating a mortgage?

C.

Elk Grove
California

Answer:

Good afternoon C.,

As an origination fee for a purchase loan, up to 1% is acceptable. Anything over that is usually excessive and if you called around you would have no problem getting a better deal. I know that I have NEVER charged an origination fee of a full 1% on a traditional loan. Purchase or refi. So even paying 1% is usually too much! The exception would be certain government backed programs (i.e. CalHFA) where it could be as much as 1.5%. However in those programs, the 1.5% is usually worth it.

In addition to the origination fee, you want to take a look at all the other fees as well. Many fees that might look like a legitimate third party fee could simply be a junk fee. Sometimes it hard to tell. You also should take at the entire rate and fee structure as well. There's no point in paying too much in fees but it's even worse if you're paying too much in fees and not getting a great interest rate/loan program.

If you'd like me to take a look at a Good Faith Estimate for you, or see what I can do for you, just let me know. I'll give you an honest assessment of your broker's offer based on today's market pricing.

Thank you for allowing me to help with your question.

Sincerely,
Greg Cowart
SENIOR LOAN CONSULTANT - STERLING MORTGAGE
(916) 367-7582
www.lendingconfidence.com
www.askforgreg.com


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