Origination Points

Definition of 'Origination Points'


A type of fee borrowers pay to lenders or loan officers in order to compensate them for the role they play in evaluating, processing and approving mortgage loans. Credit history is one factor that plays a role in the amount of origination points a borrower needs to pay. Unlike the other types of points (for example, discount points), origination points are not tax deductible.

Investopedia explains 'Origination Points'


Typically, each single origination point represents 1% of the mortgage loan. For example, if you are borrowing $150,000 and the bank is charging you 1.5 origination points, you will end up paying $2,250 (or 1.5% of $150,000).

Since the amount of origination points required to be paid is not set in stone, borrowers may be able to negotiate the amount of origination points that they pay.



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