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Mortgage origination fee

By: Movement Staff
October 1, 2019

What is it and what should you know?

If you've already been looking into homeownership, then you've probably already heard about closing costs. And if you've really been doing your homework, maybe even about a mortgage origination fee. But stopped at just seeing the word and not really sure what it is and how it works? Don't you worry – the ABCs of Mortgage is here again to help figure that out.


What is a mortgage origination fee?

Just like it costs money to borrow money from the bank, it costs money to take out a loan. That's partly how mortgage companies get paid. An origination fee is what you get charged for starting your loan process, and it's normally one percent or less of the loan price. This is another good reason to shop around with different lenders to make sure you know how much you're paying and why.


How does a mortgage origination fee work?

How Investopedia helps break it down is essentially that no one does work for free, right? The origination fee can't really be worked around since it's the charge to actually finish doing the work of all things involved with your mortgage finance processing and handling. With that said, mortgage origination fees are typically somewhere between 0.5-1.0% of the sales price. It also shouldn't come as a surprise; this is a percentage that you should be able to ask the lender about upfront to know what you may be signing up for. 

mortgage origination fee

Keep this in mind

However, while you can shop around to see what different lenders have as their fee, you should also take into consideration what their interest rate being offered is. A slightly higher mortgage origination fee might feel like a hefty strike upfront, but if there's a lower interest rate in the deal, it may be what saves you money in the long run. 


Good to know. Now what?

Now, it's time to get to shopping! Contact your local loan officer to see what the mortgage origination offered is. But as mentioned, also keep in mind what the interest rate may be and see what works best for you. Ultimately, you'll need to keep your finances in mind and what suits your situation. But a friendly conversation with one of our loan officers will be a great place to start. 


If you're starting the journey into homeownership and are worried about all these terms you're unfamiliar with, don't worry. We've got you covered. Keep up with the ABCs of Mortgage series to know what you're getting yourself into. We're here to help make sure you're informed by the time you start your application. And if you have any additional questions about what a mortgage origination fee is, or any other phrases, feel free to contact us today.

Contact a loan officer.


Author: Movement Staff

The Market Update is a weekly commentary compiled by a group of Movement Mortgage capital markets analysts with decades of combined expertise in the financial field. Movement's staff helps take complicated economic topics and turn them into a useful, easy to understand analysis to help you make the best decisions for your financial future.