An origination fee is a payment associated with the establishment of an account with a bank, broker or other company providing services handling the processing associated with taking out a loan.[1][2]

An origination fee is typically a set amount for any account. However, an origination fee usually varies from 1.0% to 5.0% of a given loan amount, depending on whether the loan was originated in the prime or the subprime market. For example, an origination fee of 10% on a $10,000 loan is $1,000.[2][3] Discount points are used to buy down the interest rates, temporarily or permanently. Origination fees and discount points are both items listed under lender-charges on the HUD-1 Settlement Statement. Regulation Z was enacted to protect buyers from abusive lending practicing with regards to origination fees and origination fees for mortgages can not be deducted.[4]

Notes

  1. ↑ "Origination Fee". investopedia. Retrieved 21 May 2013.
  2. 1 2 "loan origination fee". investorwords. Retrieved 21 May 2013.
  3. ↑ "Included fees guide". Tuesday, 18 June 2019
  4. ↑ "Loan Origination Fees: What They Are And How You Can Save". personaldebtrelief. Archived from the original on 29 October 2013. Retrieved 1 January 2014.


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