origination fee

{{Short description|Fee associated with the taking of a loan}}

An origination fee or establishment fee is a payment charged for establishing a loan account with a bank, broker, or other financial service provider.{{cite web|title=Origination Fee|url=https://www.investopedia.com/terms/o/origination-fee.asp|publisher=investopedia|accessdate=21 May 2013}}{{cite web|title=loan origination fee|url=http://www.investorwords.com/7384/loan_origination_fee.html|publisher=investorwords|accessdate=21 May 2013}}{{cite web |url=https://www.plenti.com.au/guides/what-is-an-establishment-fee/ |title=What is an establishment fee? |access-date=January 17, 2024 |publisher=Plenti }}

While origination fees can be a set amount, a tiered amount, or a percentage. Percentages typically range from 1.0% to 5.0% of the loan amount, varying based on whether the loan is in the prime or subprime market. For example, an origination fee of 5% on a $10,000 loan is $500.{{cite web| url=https://www.loans123.com.au/car-finance/ |title=Included fees guide }} Tuesday, 18 June 2019

In the United States, Discount points are used to buy down the interest rates, temporarily or permanently. Origination fees and discount points are both items listed under lender-charges on the HUD-1 Settlement Statement. Regulation Z was enacted to protect borrowers from abusive lending practices. Under this regulation, origination fees for mortgages cannot be deducted from taxes.{{cite web|title=Loan Origination Fees: What They Are And How You Can Save|url=http://www.personaldebtrelief.net/loan-origination-fees/|publisher=personaldebtrelief|accessdate=1 January 2014|archive-url=https://web.archive.org/web/20131029211549/http://www.personaldebtrelief.net/loan-origination-fees/|archive-date=29 October 2013|url-status=dead}}