All about Mortgage Origination Fee

2007-03-08 10:33:40

( Legal )



The mortgage origination fee, also know as loan fee or loan points, is a fee charged by the lending institution to its lenders when a mortgage is applied for and approved. The mortgage origination fee is a fixed percentage of the amount loaned by the borrower and it is paid upfront or deducted form the total amount of money that the borrower takes home. To you, the consumer, it is basically one of the costs associated with taking out a loan.

The mortgage origination fee is simply one way that the bank or financial institution gains revenues from its money lending activities. There are many known justifications for charging a mortgage origination fee. Most banks charge it for services rendered and resources spent in your loan or mortgage application. This means then that when you take out a loan, the bank incurs costs, mostly in employee time, which you have to reimburse the lending institution. Some banks also claim that it somehow offsets the risk being taken on mortgage borrowers. Thus, the higher the risks, the more the mortgage origination fee charged is.

The mortgage origination fee is one of the costs that you should consider in taking out a mortgage. Other such loan costs that need to be factored in be you fully commit to taking out a mortgage loan are the solicitor fee, the documentary stamps fee, and the loan taxes. All these will significantly impact the amount of money you can actually benefit from.

You may not have much control over the loan taxes your mortgage loan will incur; however, you do have a measure of control about the fee solicitors can charge you and the mortgage origination fee percentage that you will ultimately fee. In the first instance, you can carefully choose the most affordable solicitor to process your mortgage application. Of course, don’t sacrifice expertise for a few dollars difference.

The amount of mortgage origination fee can be managed by choosing your mortgage lending company carefully. Of course, quality of service as well as trustworthiness still has to be the first consideration when choosing your mortgage company. After that however, you should choose the lender with the most favorable terms, one of which is the lowest possible mortgage origination fee.


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