Mortgage Question: What is the difference between ORIGINATION fee and PROCESSING fee. ?

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I just got my final loan documents and the lender switched up the origination fee and processing fee by $ 150.

I thought origination went to points and that processing was to the lenders pocket. Is this accurate? Thanks!

  1. Reply
    February 20, 2011 at 5:56 pm

    origination is to the broker’s firm as well as processing fees in most cases. They baited you and switched fees

  2. Reply
    February 20, 2011 at 6:56 pm

    Processing fee is generally charged by the company that is actually funding the mortgage. They charge it to prepare the loan documents. The origination fee is kinda a junk fee that goes to the mortgage broker or banker as a little bonus to him. None of those fees go to points or to buy down the mortgage rate.

  3. Reply
    Brandon B
    February 20, 2011 at 7:52 pm

    Keep in mind that you can negotiate the origination fees. The processing is from the bank and it is what it is but tell the broker to cut the origination down to where you are comfortable. 1% is normal depending on the loan amount, remember that the broker is more then likely getting paid from the lender for your loan plus what they charge you upfront.

  4. Reply
    The Homeownership Coach
    February 20, 2011 at 8:15 pm

    Mortgage fees can be a little confusing.

    The origination fee is most commonly charged when there is a Broker or third party involved in the transaction. This fee is paid to them to compensate them for their work and to reimburse upfront expenses such as the cost of pulling your credit report.

    The processing fee is charged by the lender to cover their cost of generating the loan documents and preparing all of the paperwork and forms for the loan closing.

    Neither of these fees apply toward points. “Points” also known as discount points is an upfront fee that you can pay a lender to “buy” a lower interest rate. If you are interested in lowering your rate, the lender will tell you how many points it will cost you to reduce your rate by a certain amount. 1 Point = 1% of the loan amount. You pay the full amount of points at the closing of the loan. Note: Points are not available on all loan products. This will vary by lender and product.

    Hope this helps.

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