Origination Fee

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.