Financing in New York>Question Details

Kazmas, Home Buyer in New York, NY

What is "origination cost"? How does it work? Is it a on-time cost or does it get added to my mortgage rate on an ongoing basis?

Asked by Kazmas, New York, NY Mon Apr 30, 2012

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6
Origination fees are a one time fee.
0 votes Thank Flag Link Fri May 4, 2012
the origination fee is also known as points. Generally it's anywhere from 0% to 2% of the mortgage and is paid to the bank. The reason the percentage varies is that sometimes the origination fee can be built into the mortgage, sometimes called buying up or buying down the mortgage. For people with less cash up front, they may go with a no points, but slightly higher interest rate mortgage.

Talk to your mortgage professional about this and they can illustrate how the differences will affect you over the long run.
0 votes Thank Flag Link Wed May 2, 2012
Hello Kazmas,

You're probably referring to "origination fee" - this is 1% of your loan amount, and it is a one time fee.
This fee is included in your APR (annual percent rate) calculation.
When comparing deals/loan costs - you got to look to compare apples and apples, meaning:
One bank shows a note rate of 3.75% and the APR of 4.25%
Another bank shows same note rate of 3.75% but the APR is 4.05%.
The 2nd one is a better deal and a cheaper cost loan.

Hope this helps,

Irina Karan
Beachfront Realty, Inc.
IrinaKaran@gmail.com
0 votes Thank Flag Link Mon Apr 30, 2012
An origination fee is not always 1% of the loan amount. An origination fee can be any amount or percentage as determined by lender compensation plans or whatever the borrower negotiates. On a 50K loan I assure you the origination fee is more than 1%.
Flag Tue May 1, 2012
The question can best be answered and explained by your loan officer, therefore consider a consultation....
0 votes Thank Flag Link Mon Apr 30, 2012
You should consult a mortgage broker or lender's rep but my understanding is that it is a one-time fee (not added to your mortgage rate but paid in total at one time along with application fee, appraisal fee, etc). Although it doesnt get paid over the course of the loan it may increase your "APR" which is a measure of the true cost of borrowing including all fees (any mortgage people out there, feel free to correct this).
Charlie Summers, Bellmarc 917-376-1648
0 votes Thank Flag Link Mon Apr 30, 2012
The best person to answer these questions is a mortgage broker. Give Dominick Sutera a call; he will be happy to explain it all to you.

You can reach Dominick at Academy Mortgage 516-249-4800 or on his cell at 516-655-2900.
0 votes Thank Flag Link Mon Apr 30, 2012
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