An origination fee is an up-front charge for processing a new loan application. The mortgage lender thinks of this as compensation for setting up the mortgage loan as a sort of a commission-based payment or activation fee. A percentage of the mortgage loan amount normally expresses such an expense. The rates for these fees can vary greatly and occasionally go as high as 5%, but the normal range falls between 0.5% and 1% on mortgage loans. Points, which are expressed as a percent of the loan amount, should include the origination fee and coupled they will determine the lender’s charges. It is different from points, however, since an origination fee does not change, like points do, with the current interest rate. Read full post…