When you are looking for a loan, you are likely wondering how much it will cost to originate your loan, the fees involved and the impact of added costs on the affordability of the loan. As you read through these tips and insights, remember that every loan is different, and you should read all contracts before proceeding. It’s comforting to know you have options — you are not stuck with big banks that can make the lending process difficult.
What Are Loan Origination Fees?
Loan origination fees are costs tacked on to a loan that pay for additional services the lender provides. Generally, origination fees include:
- Background and credit checks
- Processing
- Inspections
- Appraisals
- Closing fees
- Fees related to online or in-person service
Remember, however, that the Federal Trade Commission has warned borrowers that lenders could try to scam consumers by requiring them to pay fees upfront. This feature is not how loans work. Generally, fees are rolled into the loan, or you may use a payment plan to pay them off after the loan is approved or closed.
Can You Avoid Loan Origination Fees?
At times, lenders advertise that they do not charge origination fees. Some lenders might add these fees to the interest rate, raising the overall interest you pay. Sometimes, you might ask the lender to waive fees, or you might restructure the loan to remove these fees and avoid certain costs.
Keep in mind, however, that origination fees are often not that…
