{"id":3365,"date":"2024-08-16T12:07:22","date_gmt":"2024-08-16T17:07:22","guid":{"rendered":"https:\/\/tomo.com\/blog\/?p=3365"},"modified":"2025-02-10T13:57:45","modified_gmt":"2025-02-10T18:57:45","slug":"what-is-a-origination-fee","status":"publish","type":"post","link":"https:\/\/tomo.com\/blog\/what-is-a-origination-fee\/","title":{"rendered":"What is a origination fee?"},"content":{"rendered":"\n

If you are in the process of shopping around for a lender, or just curious about the home buying process as a whole, you\u2019ve likely heard of origination fees (also called \u201clender fees\u201d). Loan origination fees  are fees some lenders  charge for the \u201cprivilege\u201d  of processing your mortgage. It’s a bit ironic, considering loan origination is their job, so why charge extra for what they\u2019re already paid to do? (By the way, Tomo Mortgage never charges any fees.) Origination fees are included in the closing costs<\/a> associated with a home loan, that all mortgages include. <\/p>\n\n\n\n

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Who charges lender fees?<\/h3>\n\n\n\n

<\/p>\n\n\n\n

Generally speaking, just about every major mortgage lender charges lender fees. It\u2019s been pretty standard practice in the industry for decades. Every one of the biggest lenders, like Rocket Mortgage<\/a> and Bank of America<\/a>, charge steep lender fees to simply make more money off every loan they produce. For a lot of these companies, they make more money refinancing home than new purchases, so doing the work to offer a fair price on a new loan just isn\u2019t a priority.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Tomo Mortgage<\/a> figured out how to lower the cost of processing a mortgage through automation, so we don\u2019t need to charge any lender fees.<\/p>\n\n\n\n

<\/p>\n\n\n\n

What do origination fees include? <\/h3>\n\n\n\n

<\/p>\n\n\n\n

Typically origination fees can include things like a processing fee (for processing the loan), an underwriting fee (for underwriting<\/a> the loan), a funding fee (for funding your loan).<\/p>\n\n\n\n

<\/p>\n\n\n\n

Lender fees don\u2019t include other fees associated with the closing, like a home appraisal. And they also don\u2019t reflect the cost to \u201cbuy down\u201d an interest rate. All those fees are in addition to the origination fee.<\/p>\n\n\n\n

<\/p>\n\n\n\n

How much do origination fees cost?<\/h3>\n\n\n\n

<\/p>\n\n\n\n

Other lenders (again, not Tomo Mortgage) charge between 0.5% to 1% of your total loan amount. We talk about the typical lender fee as $2,000, as a lower estimate on the median home price, but lender fees can be much higher. <\/p>\n\n\n\n

<\/p>\n\n\n\n

Say you are taking out a mortgage <\/a>home loan $445K, 0.5% of your loan would look like $2,225 in origination fees and 1% would look like $4,450. But honestly, you deserve to keep this money in your pocket, not theirs.<\/p>\n\n\n\n

<\/p>\n\n\n\n

How will I know if I am being charged origination fees?<\/h3>\n\n\n\n

<\/p>\n\n\n\n

Lenders have to lay it all out for you\u2014origination fees must be disclosed in the loan estimate and closing documents. But often these documents don\u2019t come around until much, much later in the loan application process (when you might not have enough time to switch to a different lender). It\u2019s pretty sneaky.<\/p>\n\n\n\n

<\/p>\n\n\n\n

You can double-check your loan offer to see exactly what fees you’re being charged. Look at Section A of the closing costs in your loan estimate\u2014that\u2019s where you\u2019ll find any origination charges listed. <\/p>\n\n\n\n

<\/p>\n\n\n\n

In this sample loan estimate from the Consumer Finance Protection Bureau (CFPB),<\/a>  you can see that there is a $1,097 underwriting fee added to the closing costs. That is a lender controlled fee that you could negotiate on, or shop around to find a lender that will not charge it.<\/p>\n\n\n\n

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<\/p>\n\n\n\n

So, if a lender isn\u2019t talking about lender fees\u2014that\u2019s a red flag right there. It\u2019s reasonable to just ask your loan officer what the lender fees are right in the beginning. If they say, \u201cyou\u2019ll have to wait and see\u201d or \u201cthey\u2019re all pretty standard,\u201d you might take that as a good signal to shop around for a better offer. <\/p>\n\n\n\n

<\/p>\n\n\n\n

Tomo<\/a> doesn\u2019t charge lender fees, and we\u2019re pretty proud of it, so we talk about it a lot.<\/p>\n\n\n

\"\"<\/div>

Claire Gallaudet<\/a><\/p>

Claire is a Mortgage Analyst at Tomo, where she explores the data and trends shaping the housing market. She is especially interested in how economic forces impact homebuyers. A Seattle native, she now lives in Austin, where she balances analysis and communications with teaching yoga and walks around the lake with her dog.<\/p><\/div><\/div>\n\n\n

If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

If you are in the process of shopping around for a lender, or just curious about the home buying process as a whole, you\u2019ve likely heard of origination fees (also called \u201clender fees\u201d). Loan origination fees  are fees some lenders  charge for the \u201cprivilege\u201d  of processing your mortgage. It’s a bit ironic, considering loan origination […]<\/p>\n","protected":false},"author":31,"featured_media":3776,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[285,38],"tags":[61,60],"class_list":["post-3365","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-home-buying-tips","category-mortgage-dictionary","tag-conventional-loan","tag-fha-loan"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/tomo.com\/blog\/wp-content\/uploads\/2024\/08\/what-is-an-origination-fee-tomo-jpg.webp","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/3365","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/users\/31"}],"replies":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/comments?post=3365"}],"version-history":[{"count":4,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/3365\/revisions"}],"predecessor-version":[{"id":3609,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/posts\/3365\/revisions\/3609"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media\/3776"}],"wp:attachment":[{"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/media?parent=3365"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/categories?post=3365"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tomo.com\/blog\/wp-json\/wp\/v2\/tags?post=3365"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}