What is the difference between “points” and an “origination fee”?
A. Many mortgage lenders use the term “points” which specifically refers to “loan discount points” that a lender will charge to “buy down” the interest rate provided. There is much confusion about the difference between these and a professional “origination fee” charged by a mortgage planner. An origination fee is a professional services fee, generally between 1%-2% depending on the complexity of the loan and is inclusive in the APR calculation, but does NOT effectively reduce the rate provided directly from the lender.
