Question:

How big is the broker origination fee?

Answer:

The broker origination fee is one of the many fees associated with mortgage application. A broker is provided with loans by a bank or a lender at a given rate. Brokers sell those loans with profit and this is the broker origination fee. The origination fee brokers collect from borrowers is their commission. If they sold loans without charging origination fee, brokers would not get any compensation for their work.

Broker origination fee is often split between the broker and the loan officer (1 point for each).

  • If a borrower cannot afford to pay closing costs, the broker will sell the loan with slightly higher rate, and will still get their commission from the bank.
  • If a borrower wants the loan to bear lower rate, the broker passes the cost of lower rate to the borrower in higher upfront fees.

Sometimes brokers inflate their origination fee so comparison shopping is recommended. Also, if you have great credit, you may be able to negotiate down the broker origination fee.

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