origination fee

[ aw-rij-uh-ney-shuhn fee, o-rij‐ ]

noun

, Finance.

1. a fee charged by a lender for evaluating and processing a loan application, typically a one-time fee taken out up-front as a percentage of the face value of the loan.

Word History and Origins

Origin of origination fee¹

First recorded in 1960–65

Example Sentences

These RALs impose interest on the full amount of the loan and in some cases charge origination fees.

From ProPublica

Harrington said that arrangement incentivized those lenders to “make larger loans for larger firms” that would earn them larger origination fees.

From Fortune

More About Origination Fee

What does origination fee mean in mortgages?

An origination fee is money that a lender charges a borrower for making the loan. It can encompass a number of different fees for processing the application, funding the loan, and other administrative services.

The origination fee can be compared to a commission (​an amount paid to agents, sales representatives, etc., for their services​), and is typically a percentage of the face value of the loan. It’s a one-time fee, disclosed up-front and collected at the loan closing.

Origination fees are included in the loan APR, the annual rate of interest on the loan.

Examples of origination fee in a sentence

“Depending on the lender, you could pay an origination fee, which is a percentage of the total loan amount included in the amount lent.”
—”What Can You Do With A Personal Loan?” Rocket Loans. Retrieved March 15, 2020.

“Both personal loans and home equity loans can charge origination fees, which is what you’ll pay to process the loan.”
—”Home Equity Loan Vs. Personal Loan: Which Is Better For You?” Rocket Loans. Retrieved March 15, 2020.

“Depending on the lender, you may need to pay a certain amount of money (known as an origination fee) to take out the loan, and possibly another fee if you decided to pay back your loan early (known as a prepayment penalty or fee).”
—”Personal Loan Vs. Credit Card” Rocket Loans. Retrieved March 15, 2020.

Other terms connected with the topic of origination fee

• loan
• fee
• APR
• mortgage
• commission