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Origination Fee
A fee charged by a lender or broker for processing and underwriting a new loan.
Definition
The origination fee compensates the lender or loan officer for evaluating, preparing, and funding a mortgage. It is typically expressed as a percentage of the loan amount, commonly ranging from 0.5% to 2%. Some lenders fold the origination fee into the rate, while others charge it separately at closing. This fee is distinct from discount points, which buy down the rate, though both appear on the Loan Estimate and Closing Disclosure. When comparing loan offers, consider the origination fee alongside the rate and points to get the full cost picture.
How This Relates to DSCR Loans
DSCR loan origination fees can be higher than conventional loans. Some DSCR lenders charge 1-2% origination on top of any discount points.
Related Terms
Points (Discount Points)
Upfront fees paid to the lender to reduce the interest rate, where one point equals 1% of the loan amount.
Closing Costs
Fees and expenses paid at the closing of a real estate transaction beyond the purchase price.
APR (Annual Percentage Rate)
The annualized cost of a loan including interest and fees, expressed as a percentage.
Underwriting
The process by which a lender evaluates the risk of a loan application before approving it.
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