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Simply put, an origination fee is a fee that lenders charge when entering a loan agreement to help recoup the costs of originating the loan (which can sometimes be upwards of $9,000). Typically, origination fees are a percentage of the total loan. For instance, at Visio Lending, our standard origination fee is 1% of the total loan. That means that on a $280,000 loan, the standard origination fee would be $2,800. However, on the same loan, Visio borrowers have the options to pay as high as 4 points. Let’s dive into this optionality and when each option would be best for your investment strategy.
1% is our standard fee. Borrowers looking to sell their rental properties in the near future, the rental properties we’ve coined “transitional rentals,” are interested in keeping the standard point option because they are interested in the immediate costs of the loan, rather than the lifetime of the loan.
Pair with: Our 5/1 ARM or 7/1 ARM Rate Structure!
With these options, borrowers can pay more money upfront to take basis points off their interest rates. Borrowers looking to hold onto their rental properties long term, what we’ve coined “permanent rentals,” are more interested in the lifetime cost of the loan and the options that will save them money in the long-term.
Pair with: Our 30-Yr Fixed Rate Structure
Editor's Note: This post was originally published in March 2019 and has been updated in June 2020 for freshness and accuracy.