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Origination Fee

Origination Fee

A charge that borrowers incur when they obtain a mortgage loan. It's an upfront fee that lenders impose to cover their costs of processing the loan application, including underwriting, documentation, and verification of the borrower's financial information. The origination fee is typically expressed as a percentage of the loan amount, ranging from 0.5% to 1% or even higher in some cases. For example, if a borrower takes out a $200,000 mortgage with a 1% origination fee, they would need to pay $2,000 at closing. While some lenders may offer lower or no origination fees, borrowers should be aware that these fees can add up to thousands of dollars and impact the overall cost of the loan. Therefore, it's important to compare and shop around for different lenders to find the best deal. Some borrowers may also negotiate with the lender to waive or reduce the origination fee, although this is not always possible. In summary, an origination fee is a common cost associated with getting a mortgage loan, and borrowers should factor it into their budget when considering their options.
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