What Should You Know About Loan Origination Fees?
When out shopping for a mortgage and receiving Initial Loan Disclosures, you may notice certain fees the lender may be charging. In this article you will gain a basic understanding of what originations fees will be so you will be equipped to make the best lender choice.
One common fee is termed an origination fee. This is typically a fee a lender charges for their expenses in origination, processing and underwriting the loan. Some lenders split this fee into either an underwriting fee and/or a processing fee. All these fees typically go to the lender and in some cases of portion of them may be directed to the wholesale lender your mortgage broker is directing your loan to. Typically, an origination fee is a percentage of the proposed mortgage amount – normally 0.5% or 1.0%. Underwriting and processing fees are a fixed dollar amount.
It is a combination of these 3 fees which should be compared from one lender to another. Remember, you can negotiate these fees with your lender. Remember, the annual percentage rate (APR) is meant to be a tool to compare one lender’s interest and fees to another. Most of the time if one lender’s APR is lower than another then that lender is providing you better terms on your loan.
As always, it is best to work with a trusted mortgage lender such as the Home Loan Advisors at Hall Financial.