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.

BREAKING DOWN '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.

  1. Origination

    The process of creating a home loan or mortgage. During the origination ...
  2. Closing Costs

    The expenses, over and above the price of the property that buyers ...
  3. Discount Points

    A type of prepaid interest mortgage borrowers can purchase that ...
  4. Loan Officer

    Representatives of banks, credit unions and other financial institutions ...
  5. Mortgage Broker

    An intermediary who brings mortgage borrowers and mortgage lenders ...
  6. Negative Points

    A cash rebate paid by lenders to a mortgage broker or the borrower ...
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