Origination Fee

The origination fee is one of the many charges that comes along with taking out a mortgage. An origination fee will be added on top of the mortgage interest fees and will usually just be added to the principal amount. In some cases, however, the mortgage lender will require borrowers to pay the origination fee up front as a condition for providing the loan. This choice is ultimately at the discretion of the lender. The origination fee amount is determined by the amount of money being borrowed. In most cases, it will be a very small amount. Some lenders charge less than 1 percent as an origination fee. Larger mortgages tend to have origination fees with significantly lower percentages, while a small mortgage can have a comparatively large origination percentage. Banks charge this fee in order to pay for their own administration costs.