Definition
Origination fees (0.5-1.5% of loan) cover lender costs for processing, underwriting, and funding your loan. They're included in APR and typically collected at closing. These fees are negotiable—shop around and ask if lenders will reduce or waive them.
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The origination fee covers the lender's costs for loan processing, appraisal ordering, underwriting, and loan documentation. It's included in the APR calculation and is typically collected at closing. Some lenders may be willing to negotiate or reduce this fee.
Pro Tip
Origination fees are negotiable; shop around and ask lenders if they'll reduce or waive fees to earn your business.
Example
On a $300,000 loan with a 1% origination fee, the borrower pays $3,000 in origination fees at closing.