Origination Fee vs Origination Charge

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Some new vocabulary came along the new good faith estimate that was introduced in 2010. For anyone who has never been through the loan process before, the terminology change didn’t really matter too much to them. On the other hand, those who got a mortgage prior to the change (and are buying/refinancing now) find the new terms a bit confusing.

These new terms have been around for a couple of years now, but I’m hearing this question more often these days… “‘Origination Fee’ and ‘Origination Charge’… they mean the same thing, don’t they?”

They are similar, but not exactly the same. Let me explain.

  • the origination fee is the traditional one point fee that is paid to the mortgage broker/bank for originating the loan.
  • the origination charge includes all lender fees. This would include any underwriting fee, processing fee, and the origination fee.

Almost all of my clients who are refinancing now are choosing to not pay an “origination fee,” yet they are still seeing an “origination charge.” How does a consumer know they are not paying an origination fee as part of the origination charge?

Look at the good faith estimate. If they origination charge (Box A) is around $1,000, it is highly unlikely it contains an origination fee. Let me give an example.

Suppose you have a loan amount of $200,000, and your loan officer says there is not an origination fee on this loan. There is an origination charge of $1,000 listed in Box A on the good faith estimate. Since the underwriting fee is around $750, and there may be an office processing fee of $250, those two add up to $1,000. That would be your origination charge. There isn’t any room in that figure for the origination fee.

In short – you can have an origination charge without an origination fee, but you can still get loans without the traditional 1 point origination fee.

If you have questions, make sure your loan officer takes time to explain the differences to you. If your loan officer won’t take the time, and the property you are trying to purchase/refinance is in Georgia, I’ll be happy to take the time to explain the differences. To get started, here’s how to find me.

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