Origination
 |
Definition of 'Origination'The process of creating a home loan or mortgage. During the origination process, a borrower submits a variety of financial information - tax returns, prior paychecks, credit card info, bank balances, etc. - to the mortgage lender, who uses it to determine the type of loan the borrower is eligible for and what interest rate he or she will pay. The lender will also rely on the borrower's credit report and other information to determine loan eligibility. |
 |
Investopedia explains 'Origination'Everyone must go through the origination process when obtaining a real estate loan, although the type of loan can vary greatly. The three most common loan types are fixed-rate, adjustable-rate and hybrid.Fixed-rate loans carry the same interest rate for the life of the loan, adjustable-rate mortgages (ARMs) offer a rate that changes in conjunction with an index (like Treasury securities), while hybrid loans have features of both (typically they start as fixed-rate loans and convert to ARMs). In addition, some borrowers may qualify for a government loan, such as those offered by the Federal Housing Authority (FHA) and/or the Department of Veterans Affairs (VA). These non-conventional loans are designed to make it easier for qualifying individuals to buy homes and typically feature lower qualifying ratios, as well as a lower or no down payment. |
Related Definitions
Articles Of Interest
-
To Rent Or Buy? The Financial Issues
Thinking of buying a home? We look at the initial and ongoing costs, as well as the so-called benefits. -
Analyzing A Bank's Financial Statements
A careful review of a bank's financial statements can help you identify key factors in a potential investment. -
Score A Cheap Mortgage
Hidden costs can create what looks like a good deal. Find out how to find the best mortgage possible. -
The Reverse Mortgage: A Retirement Tool
Discover another way to fund your retirement without having to make payments on a loan. -
Who Is To Blame For The Subprime Crisis?
From lenders to buyers to hedge funds, it appears everyone has blood on their hands. -
How To Keep Costs Low When Refinancing Your Home
With interest rates still being relatively low, now is a great time to capitalize on refinancing your home. Be aware of what fees are involved in a refinance, and how to keep these costs low. -
How To Properly Research For The Best Mortgage Rate
You’ve probably been told to shop around for the best rate, but what exactly does that entail? Find out how to ensure you're getting the best possible rate on your mortgage. -
What Is A Mortgage?
A mortgage is a loan used to purchase a home, where the property serves as the borrower's collateral. -
A Lousy Investment That May Be A Good Source Of Income
In the past few years reverse mortgages have been heavily marketed as the way to become debt, and worry, free. For some seniors a reverse mortgage makes sense, for other though this dream product ... -
How Interest Rates Affect The Housing Market
Understand how rate changes can affect home prices, and learn how you can keep up.
Free Annual Reports