What fee is charged by a lender for making a mortgage loan?

The loan origination fee is a charge that a lender imposes for processing a new mortgage loan application. This fee typically covers the lender's costs associated with evaluating and preparing the loan for funding. It is often expressed as a percentage of the total loan amount and is paid at the closing of the loan.

When securing a mortgage, borrowers should be aware of this fee as it directly relates to the lender's service in facilitating the loan. Understanding the significance of the loan origination fee is crucial when comparing different lenders, as it can significantly affect the overall cost of borrowing.

Other options like the appraisal fee and processing fee, while also important in the lending process, serve different functions. The appraisal fee is specific to the cost of having an independent appraiser evaluate the property's value to ensure it meets the lender's requirements. The processing fee is generally related to the administrative costs of processing the mortgage application. Closing costs encompass a broad range of fees associated with finalizing the purchase of a property, including but not limited to loan origination, appraisal, title insurance, and other related expenses.