What Is the Origination Fee on a Refinance?

An origination fee is a fee charged by a lender for creating a customer's loan.The origination fee on a mortgage refinance is basically the same as that for a first-time mortgage.

Function

Across the United States, loan origination fees can range from 0.5 to 2 percent of the total amount of the loan.

MIsconceptions

Origination fees are payments to the lender or the investor by the person(s) borrowing the money. The origination fee is not the same as discount points, which are used to "buy down" the interest rate on the loan.

Effects

Origination fees should be clearly listed on the Good Faith Estimate provided to the borrower by the lender. Borrowers should demand a Good Faith Estimate if one is not provided (before signing any documents).

Theories/Speculation

Origination fees are part of the loan transaction, and depending on the amount of the loan, can be a sizable sum. For example, someone borrowing $100,000 with a 3 percent origination fee can pay as much as $2,000 or more.

Significance

Because fees vary widely from lender to lender, consumers should shop around to get the best deal available (see Resources).

Resources

• Federal Housing Administration HUD News Release
• What Are Mortgage Loan Points?
• Loan Origination Fee Range
• Loan Information Rates, Tips and Advice
• Nationwide Community Best Fee Rankings