Mortgage Origination Fee

A mortgage origination fee is a fee charged by the lender in exchange for processing a loan. It is typically between 0.5% and 1% of the total loan amount. You’ll also see other origination charges on your Loan Estimate and Closing Disclosure in the event that there are prepaid interest points associated with getting a particular interest rate.

Also called mortgage points or discount points, prepaid interest points are points paid in exchange for getting a lower interest rate. One point is equal to 1% of the loan amount, but you can buy the points in increments down to 0.125%.

If you’re trying to keep closing costs at bay, you can also take a lender credit, which amounts to negative points. Here, you get a slightly higher rate in exchange for lower closing costs. Rather than paying upfront, you effectively build some or all costs into the life of the loan.