What are "origination fees"?

Study for the CFPB Mortgage Compliance Test. Learn with detailed quizzes and flashcards. Understand the key concepts, regulations, and guidelines with comprehensive explanations. Get ready to ace your exam!

Origination fees are charges that lenders impose to process a loan application. These fees cover the costs associated with evaluating, preparing, and approving a mortgage loan. They essentially compensate the lender for the work involved in setting up the loan, which may include underwriting, documentation, and other administrative activities necessary to originate the mortgage.

Understanding the nature of origination fees is essential for both lenders and borrowers, as these fees can significantly affect the overall cost of obtaining a mortgage. Borrowers should be aware of these fees when budgeting for their home purchase to ensure they are fully informed about the total costs associated with their mortgage.

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