Definition - What does Origination Fee mean?
An origination fee is a fee that a lender will charge a borrower simply to process a loan request and to generate a new loan for the borrower. These fees usually range from .5 to 1 percent of the value of the loan. Often, these fees are charged up-front by the lender.
Justipedia explains Origination Fee
An example of an origination fee would be a bank that charges a man seeking a $100,000.00 mortgage a fee of $1,000.00 simply to process his application and set up the loan. The reason why lenders do this is because it takes company resources for them to do the leg work of setting up the loan. The higher the amount that is being sought in the loan, the higher the origination fee.
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