A loan origination fee pays for the costs a lender incurs in originating the mortgage, such as the paperwork and time it takes to determine if a borrower is qualified for the mortgage. Different lenders may charge different amounts – or nothing at all — for this service. Generally speaking, lenders who charge an origination fee calculate the fee as a percentage of the total value of the loan, usually around one percent, although some lenders may charge a flat fee.
Whatever a lender charges, the origination fee is one of the costs that will remain fixed during the mortgage process. The origination fee you see on the loan estimate form, which the lender is required to provide you within 3 days of applying for a mortgage, will be the same fee and amount that you see on the closing disclosure, which the lender must provide you at least 3 days before the closing. Borrowers pay the origination fee, along with other closing costs and the down payment, at closing.
Since there is no “standard” origination fee, if you think a lender is charging too much for this fee, shop around and compare fees at different lenders.