Lender's fee v.s. Origination charges

W

wb

New member
what is the difference between lender's fee and origination fee?  I saw an origination fee in GFE about 1.2% of the loan. I remembered the in-house
loan officer told me that borrower don't need to pay this.  Some estimate provided by the lender shows a lender's fee about 1-1.5k. for those who have
closed loans, what is the norm?  Thank you very much!
 
wb said:
what is the difference between lender's fee and origination fee?  I saw an origination fee in GFE about 1.2% of the loan. I remembered the in-house
loan officer told me that borrower don't need to pay this.  Some estimate provided by the lender shows a lender's fee about 1-1.5k. for those who have
closed loans, what is the norm?  Thank you very much!
Click to expand...

I think lender's fee and origination fee are basically the same thing.  It's the money the lender charges you.  I rather have the points than lender fee since the points are tax deductible.
 
Lender/underwriting/processing/origination fess are just "junk" fees that lenders charge for a loan.  Most lenders that I've seen will charge anywhere between $600 to $1,000 (doesn't include the cost for the appraisal, credit report, and flood cert).  I think anything over $1k is a bit too much to pay.  As always, shop around with at least 2-3 lenders.
 
Part 1

deciphering lender fees and origination fees can be a bit complex.  the important thing to remember is the big picture as it can get convoluted.  the goal for the homeowner is to determine what they are paying in fees AND what rate of interest they are getting for those fees.

some lenders offer low fees but it might be paired with a higher interest rate.  other lenders may appear expensive because they have higher fees but it may come with a lower interest rate.  which is better depends on the homeowner's situation.

a bit of background...  the interest rate that is offered has some degree of profit imbedded in the rate whether it is offered by a retail bank, mortgage banker (direct lender) or mortgage broker.  higher interest rates have greater profit structured in the rate.  the key thing to remember is that only the mortgage broker is required to disclose the profit that is structured into the rate.

when looking at a Good Faith Estimate presented by a retail bank or mortgage banker, one will see "lower" lender fees because the profit is not disclosed.  Mortgage brokers may show a credit back to offset the disclosed profit so that the fee does not come out of the homebuyer's pocket but rather is imbedded in the rate (they are showing the profit as part of the origination fee on the GFE and a credit back to offset some of the origination fee so the homebuyer is not paying the full origination fee out-of-pocket).
 
Part 2

so to answer your question of what are lender fees and origination fees, they are essentially the same.

lender fees tend to be fees such as:
* origination fee
* underwriting fee
* processing fee
* credit report fee
* hoa certification fee

regarding the part about not having to pay origination fee, it will depend if the GFE is being provided by a broker or bank/direct lender as the broker must disclose the profit which will appear as origination even if it not being paid out-of-pocket at closing (profit is in the rate).

about the "normal" lender fees, they should be between $1,000 - $1,500 excluding the appraisal report fee.  this should come with a very competitive interest rate.  if the lender fees are higher, then it should come with an interest rate below the currently available market rate associated with the "normal" fees.
 
Part 3

so back to the big picture.  regardless of what the fee is called or whether or not it is disclosed/not disclosed, the homebuyer typically cares about how much is being spent when all is said and done and what interest rate they obtained.

the way to compare what is spent is by looking at Box A on the Good Faith Estimate which is the Adjusted Origination Charges.  this is the amount you will be paying to the bank, direct lender or broker.  (Box B will typically be third party expenses which will likely be similar between lenders/brokers for your transaction.)

then compare the interest rate offered (assuming all other things are equal).

hope this helps... heck, hope this even makes sense.
 
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