Question
What is an origination fee on a loan?
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GPT-4o mini
An origination fee is a charge assessed by a lender for processing a new loan application. This fee compensates the lender for the administrative costs associated with evaluating and approving the loan. It is typically expressed as a percentage of the total loan amount, often ranging from 0.5% to 1% for mortgages, although it can vary based on the type of loan and the lender's policies.
The origination fee is generally deducted from the loan amount disbursed to the borrower, meaning that if you take out a loan of $100,000 with a 1% origination fee, you would receive $99,000 in cash after the fee is deducted. Borrowers should be aware of origination fees when comparing loan options, as they can significantly impact the overall cost of borrowing.
The origination fee is generally deducted from the loan amount disbursed to the borrower, meaning that if you take out a loan of $100,000 with a 1% origination fee, you would receive $99,000 in cash after the fee is deducted. Borrowers should be aware of origination fees when comparing loan options, as they can significantly impact the overall cost of borrowing.
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