Spam prevention
Ambassador
2,570,577
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

 This is often the commission to the lender.  It's how they make their money. 

Fees are typically based upon "points", which means a percentage of the loan amount.  I've seen them run from 1% to 6%.   Shop around.  

Oct 16, 2021 06:18 PM
Rainmaker
4,098,067
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

It's a wise idea to have a good mortgage lender among your list of trusted advisers.  For you and for your prospective clients.  

Oct 16, 2021 05:40 PM
Rainmaker
6,604,655
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Profits.

Oct 16, 2021 05:28 PM
Ambassador
3,054,910
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

Money Money Money to pay the lender and I imagine profits for the company the lender works with. 

Oct 17, 2021 08:29 AM
Rainmaker
910,476
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Loan origination fees are fees charged by a lender to cover the lender's costs and increase the lender's margin of income at the beginning of the loan aside from interest charges.

Oct 16, 2021 08:44 PM
Ambassador
2,604,303
Wanda Kubat-Nerdin - Wanda Can!
Red Rock Real Estate - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

They are part of lender closing costs that are paid when buying a house or refinancing a mortgage.

Oct 16, 2021 06:19 PM
Rainmaker
1,215,600
Gary Frimann, CRS, GRI, SRES
Eagle Ridge Realty / Signature Homes & Estates - Gilroy, CA
REALTOR and Broker

Some are "junk fees" and some are used to bump the yield on the return of the loan.  Some are the costs that occur in obtaining the loan.

Oct 17, 2021 09:54 AM
Rainmaker
821,662
Olga Simoncelli
Veritas Prime, LLC dba Veritas Prime Real Estate - New Fairfield, CT
CONSULTANT, Real Estate Services & Risk Management

Most basically, for bank profits. Supposedly it's to bring down your interest rate, but if you do the numbers, the overall cost when using points is higher at the end of the day.

Oct 17, 2021 09:32 AM
Rainmaker
4,208,135
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Loan origination fees cover the cost of processing the loan and overall loan yield to the investor along with the note rate.

Oct 17, 2021 04:40 AM
Rainmaker
645,168
Tony Lewis
Summit Real Estate Group - Valencia, CA
Summit Real Estate Santa Clarita & Aliso Viejo

A fee to originate a loan.

Oct 16, 2021 08:19 PM
Ambassador
4,578,769
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

It's how the lenders make money. Always good to know if there are origination fees with a particular lender.

Oct 16, 2021 07:40 PM
Rainer
116,578
Karen Climer
Demetree School of Real Estate - Orlando, FL
Teaching people to pass the real estate exam

It's a way for the lender to make money.

Oct 16, 2021 05:05 PM
Ambassador
5,407,052
Bob Crane
Woodland Management Service / Woodland Real Estate, EXP - Stevens Point, WI
Forestland Experts! 715-204-9671

Everybody needs to get paid.

Oct 18, 2021 07:39 PM
Rainer
317,445
Caroline Gerardo
Sun West Mortgage Corporation - Newport Beach, CA
C. G. Barbeau the Loan Lady nmls 324982

Two shades to the answer.

Most lenders advertise interest rates with an origination fee of 1% or one times the loan amount not sales price.

Additional points can be paid in increments of sixteenths which paying more points or additional origination fees the rate goes down in steps.

Lenders are not paid by "origination fees."

Lenders can be paid in a broker fee which is often split in some fashion with the house or company they work under.

Lenders set their commission either annually or quarterly and are paid the same percentage on all closed loan amounts during the time period they set with their "house" as I call it or bank or mortgage company/corporation. Lenders cannot flex commission on loans sold to GSE or our government BUT they can flex on broker points.

 

Oct 18, 2021 05:30 PM
Rainmaker
4,011,275
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Lenders to make money

 

Oct 18, 2021 09:33 AM
Rainmaker
2,641,452
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Essentially they gurantee a living for the loan officer

Oct 18, 2021 06:18 AM
Rainmaker
1,722,655
Lyn Sims
Schaumburg, IL
Schaumburg Real Estate Agent Retired

You have to wonder don't ya? You've got great answers below but ..... if you add up all the other junk fees on the settlement sheet, you'll find there are more 'add on's' than just the origination fee.

$125 fee to copy the loan papers from a PDF. That's a great one too.

Oct 17, 2021 07:06 AM