By the Wirly Editorial Team | AI-assisted, human-reviewed
An origination fee is a charge from the lender for processing and underwriting your mortgage application. It typically ranges from 0.5% to 1% of the loan amount.
The origination fee covers the lender's costs for evaluating your application, verifying your financial information, and preparing the loan documents. On a $300,000 mortgage, a 1% origination fee would cost $3,000. This fee is part of your closing costs and is disclosed on your Loan Estimate.
Not all lenders charge origination fees. Some online lenders (like Better and SoFi) advertise no origination fees as a competitive advantage. However, lenders that waive origination fees may offset the cost with a slightly higher interest rate. The difference can be subtle, which is why comparing APRs (which include origination fees) gives a more accurate cost picture than comparing interest rates alone.
When shopping for a refinance, ask each lender about their origination fee upfront. Some lenders may be willing to negotiate or reduce the fee, especially if you have strong credit or are bringing other business to the institution. The fee must be clearly disclosed on both the Loan Estimate and the Closing Disclosure.
Closing costs are the fees and expenses you pay when finalizing a mortgage, typically ranging from 2% to 5% of the loan amount. They include lender fees, appraisal costs, title insurance, and government recording charges.
APR (Annual Percentage Rate)The annual percentage rate is the total yearly cost of borrowing, including interest and fees, expressed as a percentage. APR gives you a more complete picture of loan cost than the interest rate alone.
Loan EstimateA Loan Estimate is a standardized three-page form that lenders must provide within three business days of receiving your mortgage application. It shows the estimated interest rate, monthly payment, and closing costs.
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