January 9th, 2018 7:36 AM by Jackie A. Graves, President
A loan origination fee is not a single fee, but actually a set
of lender-specific fees that are part of your costs when closing a mortgage
loan. Let’s take a closer look.
Federal law requires that all consumers receive the
same rate and fee disclosures at the beginning and end of every
The Loan Estimate is the disclosure you get at the beginning of
the process, and the Closing Disclosure is the one you get at the end of the
The Loan Estimate is three pages, and the top of page two has a
section called Origination Charges, which are the fees charged by the lender.
The Closing Disclosure is five pages, and the top of page two
also has a section called Origination Charges, making it easy to confirm
whether the lender fees you were quoted on the Loan Estimate are the same
before your loan closes. The Closing Disclosure also specifies whether
Origination Charges are paid by you (the borrower), the seller of the home
you’re buying, or anyone else.
This category includes lender fees for underwriting and
processing your loan. Every lender is slightly different in how they label
their fees in this section, so the names you might see in this section are:
Some lenders combine all of these into one single fee, and some
break them out.
One thing all lenders will show consistently here is whether
they’re charging a percentage of the loan amount as an additional fee on top of
the fees noted above. These fees are also known as “points,” and should be
labeled as points on the Loan Estimate and Closing Disclosure.
Points are an extra fee you pay for a lower rate. You aren’t
required to pay points, so ask your lender to explain the rate difference
between points and no-points options, and also ask them to tell you how long it
will take the rate savings from paying points to repay the cost of the points.
What other fees should I prepare for?
Charges are just the lender fees for obtaining a loan, but there are other fees
for obtaining a loan, which also show up (under Origination Charges) on the
Loan Estimate and Closing Disclosure as follows:
lender fees, there is another section on page two of the Loan Estimate and
Closing Disclosure called Other Costs that captures all other non-lender fees
associated with a mortgage transaction, including:
Loan Estimate and Closing Disclosure forms are very clear about showing totals
for all of these various categories of closing costs.
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