Finance:Origination fee
An origination fee or establishment fee is a payment charged for establishing a loan account with a bank, broker, or other financial service provider.[1][2][3]
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.[2][4] 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.[5]
See also
- Bank fee
- Overdraft fee
Notes
- ↑ "Origination Fee". investopedia. https://www.investopedia.com/terms/o/origination-fee.asp. Retrieved 21 May 2013.
- ↑ 2.0 2.1 "loan origination fee". investorwords. http://www.investorwords.com/7384/loan_origination_fee.html. Retrieved 21 May 2013.
- ↑ "What is an establishment fee?". Plenti. https://www.plenti.com.au/guides/what-is-an-establishment-fee/.
- ↑ "Included fees guide". https://www.loans123.com.au/car-finance/. Tuesday, 18 June 2019
- ↑ "Loan Origination Fees: What They Are And How You Can Save". personaldebtrelief. http://www.personaldebtrelief.net/loan-origination-fees/. Retrieved 1 January 2014.
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