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Origination Fees

Origination Fees

Origination fees in mortgages are usually 1% of your loan amount. These origination fees are the fees paid to the company originating your loan to cover their costs associated with creating, processing, and closing your mortgage. Using the lower cost structure of the internet, I have been able to eliminate origination fees from our fees structure, saving our clients literally thousands of dollars. If your loan is for $200,000 you just saved $2,000. I am frequently asked by clients how we get paid if we are not charging origination fees. Really, the answer is quite simple. After the loan is closed, we sell the loan to an investor and are paid at that time by the lender. Our cost structure is such that we do not need to be paid by both the borrower and by the lender. Email origination fees questions. Origination fees and discount points are both items listed under lender-charges on the HUD-1 Settlement Statement. Origination fees should be located at the top of a "good faith estimate" and must be disclosed within 3 days after applying for a home loan.

However, if your loan is for a purchase, I can show the origination fees on both the Good Faith Estimate and the HUD1 settlement statement. I also will show a Lender Credit of the same amount. IRS has always allowed these origination fees to be deducted from your taxes in the year the transaction occurred, but will now allow the reduction regardless of who pays for the fees

In our $200,000 loan scenario, you save $2,000 in fees out of your pocket compared to the average lender but you also get an additional $2,000 deduction this year. Creative? 

Learn more about origination fees and discount points and their use to buy down your mortgage interest rate.

Read on to learn more about other closing costs in addition to the origination fees

Read my new lock or float daily blog to see where rates are going

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your consumer and mortgage debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.

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