We understand how frustrating it can be to search for a home in Austin. Half the battle is learning the key terms and what they mean in regards to Texas real estate. So each week we bring you Key Term Tuesday – our way of helping you decode the industry jargon that keeps you from owning your home search.
What is an Origination Fee?
An Origination Fee aka “points” refers to an upfront fee a lender may assess on a loan. It essentially is prepaid interest that the borrower must pay in order to obtain the loan. An origination fee increases the profit margin for the lender and can make what would otherwise be a risky loan worth the risk. Similarly, a borrower can use points to lower the interest rate over the life of the loan.
Not all loans carry an origination fee (hence the expression “zero points” loans). Always ask, before agreeing to a loan, for a detailed list of all the costs and fees associated with the particular loan program under consideration.
Looking for a Real Estate Expert?
Our team has a combined 55+ years of experience helping home buyers understand the real estate market. Check out our approach to Buying a Home in Austin to learn more about our team and how we work. Then, call us at (512) 827-8323 or email us at info@11OaksRealty.com to schedule a no obligation consultation.
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