What fee is charged by a lender to initiate the loan process?

What fee is charged by a lender to initiate the loan process?

• A. Processing Fee
• B. Underwriting Fee
• C. Origination Fee
• D. Application Fee

Answer: (C)

The correct answer is the origination fee. This fee is specifically charged by the lender to cover the costs associated with processing a new loan application. It includes various activities that initiate the loan process, such as preparing documents and evaluating the borrower's financial situation. The origination fee is typically expressed as a percentage of the total loan amount and is usually due at the closing of the mortgage. In contrast, processing fees are associated with the day-to-day handling of the loan and may not be specifically tied to the initiation phase. The underwriting fee is charged for assessing the risk of lending to the borrower and determining whether to approve the loan, which typically occurs later in the loan processing timeline. The application fee is often a smaller, initial fee that may cover the costs of processing the loan application but does not encompass the broader range of services included in the origination fee. Therefore, the origination fee is specifically aimed at initiating the loan process, making it the correct choice.

The correct answer is the origination fee. This fee is specifically charged by the lender to cover the costs associated with processing a new loan application. It includes various activities that initiate the loan process, such as preparing documents and evaluating the borrower's financial situation. The origination fee is typically expressed as a percentage of the total loan amount and is usually due at the closing of the mortgage.

In contrast, processing fees are associated with the day-to-day handling of the loan and may not be specifically tied to the initiation phase. The underwriting fee is charged for assessing the risk of lending to the borrower and determining whether to approve the loan, which typically occurs later in the loan processing timeline. The application fee is often a smaller, initial fee that may cover the costs of processing the loan application but does not encompass the broader range of services included in the origination fee. Therefore, the origination fee is specifically aimed at initiating the loan process, making it the correct choice.