Expert Bankruptcy & Debt Relief Insights

The amount you pay on a home mortgage, between the time you buy the house and when you own it outright, is so much higher than the purchase price that the seller received when you bought it that compound interest alone cannot account for the difference. There are so many other fees, from mortgage insurance to homeowners’ insurance. In fact, the list of closing costs goes on for several pages; consumer advocates will point out that some of the rows on the spreadsheet of closing costs are merely junk fees, and if you are astute enough to notice this fact and audacious enough to negotiate about it, you might be able to get the settlement company to waive some of them at closing.

A mortgage origination fee, while it is not directly beneficial to the borrower, is not a junk fee. It is also so big that you cannot make it go away simply by pointing out its existence. Although mortgage origination fees are costly, so costly that they can be the deciding factor in whether you can afford to close on the sale, you have options that will enable you to avoid paying them, or at least to avoid paying them in a lump sum. If you are applying for home mortgage loans and are worried about mortgage origination fees, contact an Oakland lawsuits, collections, and creditor harassment lawyer.

What Is the Point of Mortgage Origination Fees?

Most people borrow a mortgage loan when they buy a house. The seller walks away with the full sale price. The buyer gets a house, even though keeping it will require them to make monthly payments on a home mortgage loan for the foreseeable future. What about the mortgage lender who paid the seller most of the money for the sale? What does the lender get? Yes, the lender gets a down payment from the buyer, plus installment payments every month that include a minuscule amount of the principal of the loan, plus piles of interest. The chances of the buyer defaulting on the loan are too great for the lender to be content with that, though. Therefore, mortgage lenders charge an origination fee, which compensates the lender for issuing the mortgage.

The typical amount for a mortgage origination fee is one percent of the loan principal, but sometimes it is less. The lower the interest rate, the higher the mortgage origination fee. A law that went into effect after the housing market crisis of 2008 capped mortgage origination fees at one percent.

Who is Responsible for Paying Mortgage Origination Fees?

The buyer is usually the one to pay the origination fee, but the seller may agree to pay it if they are eager to sell. This is more likely if the house is new construction and the seller is a real estate developer. Some affordable housing programs even offer mortgage origination fee assistance grants.

Contact the Law Office of Melanie Tavare About Mortgage Origination Fees

A debt relief lawyer can help you if you are concerned about being able to pay the origination fee on your home mortgage.  Contact the Law Office of Melanie Tavare in Oakland, California, or call (510)255-4646 for a case evaluation.