What is a Loan Origination Fee? [And How to Not Pay It]

Loan origination fees are a holdover from yester-year but that doesn’t mean you have to pay them. Loans are expensive but it turns out, they might be even more expensive than you think.

Besides tens of thousands in interest you might pay over decades repaying the loan, you could also owe thousands in upfront costs just to get the loan signed.

Let’s look at loan origination fees, what they include and how to get around paying them on your next loan.

What are Loan Origination Fees?

The loan origination fee is part of your closing costs for a loan, money you have to bring when you sign the loan to receive funds. 

What are Loan Origination Fees?

While these aren’t the only fees paid for a loan, they generally are a big part of your costs and go to paying the lender for services. 

How to Calculate Loan Origination Fees

To calculate the loan origination fee, add up the individual expenses in your disclosure form. Then take this total divided by your loan amount. That percentage is the origination fee.

What is the Average Loan Origination Fee?

The average loan origination fee varies but it’s generally from 0.5% to 2% for mortgages and up to 5% for personal loans. Since fees are calculated as a percentage of the loan amount, larger loans will have lower fees.

Are Loan Origination Fees Negotiable?

YES! Anyone that says origination fees are not negotiable is either the one collecting the fees or doesn’t know what they’re talking about.

Are Loan Origination Fees Negotiable?

Some lenders don’t even charge origination fees anymore so you better believe they’re negotiable anywhere!

Swipe up to learn more!