Question:

How much is the average loan origination fee?

Answer:

The average loan origination fee will be 0.5 to 2% of the loan amount, if expressed in points. It is charged by mortgage brokers for processing and closing your mortgage.

  1. Sometimes title fees, escrow, appraisal and other fees will be zeroed, but the loan origination fee will be inflated and high above the average. If that is the case, your loan origination fee will not be tax deductible.
  2. If you are a perfect credit borrower, it very likely that your loan processing fee will be much lower than for the average borrower.
  3. If you are applying for a home loan over the internet, some online lenders have found a way to minimize significantly the loan origination fee. The good news is even large lenders may be doing it so the risk of becoming a victim of a mortgage fraud is becoming smaller. However, if you are shopping a mortgage from a smaller local lender, make sure you check their license and reputation in the community.
  4. It is possible that you see both a loan origination fee and a broker fee on the GFE. They are one and the same thing and the catch is they both make the commission look smaller than it is.
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