Origination Fee

The charge for originating a loan; is usually calculated in the form of points and paid at closing. One point equals one percent of the loan amount. On a conventional loan, the loan origination fee is the number of points a borrower pays.

An origination fee, or activation fee, is a payment associated with the establishment of an account with a bank, broker or other company providing services handling the processing associated with taking out a loan. An activation fee is typically a set amount for any account. However, an origination fee usually varies from 0. 5% (half a point) to 2% (two points) of a given loan amount, depending on whether the loan was originated in the prime or the subprime market. For example, an origination fee of 2% on a $200,000 loan is $4,000. Discount points are used to buy down the interest rates, temporarily or permanently. Origination fees and discount points are both items listed under lender-charges on the HUD-1 Settlement Statement. Do note the issue of fraud, scams etc. It is common that advance fees are demanded by criminals and often via internet contacts. If you are asked to pay a fee - cross check the information with the bank. Ask your bank to contact the said bank via their internal contact links - unavailable to the public and unavailable to criminals such as scammers. Don't rely on given bank information and remember that banks NEVER demand account information or credit card information via email. Banks generally don't use yahoo, gmail or hotmail in their domain names (the part of the email address following the @ sign). Get in touch with the country's embassy in your country and via the country's department of finance you can cross check any given information regarding banks. Remember that scammers often make fake website pages - claiming to be the bank in charge. Enlarge any website page - does the print and font look correct - not a lot of pixels ? Is the print even - blurry and clear print is common on pages from scammers as they use "cut and paste" - which also gives shaded areas "under" the print. Never trust spam and if you are unsure - don't respond. I also strongly advise against sending ID copies - some countries forbid copying of passports etc and ID theft is a problem too.