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I recently received a email from my Ask an Expert link on MortgageKnowledgebase.com asking me to explain line 801 – Loan Origination Fee found on the Good Faith Estimate (GFE). This line sometimes worries folks and I understand that people want a good deal on their mortgage, but people also want to make a decent living as loan originators as well. Anyway, I thought I’d post my explanation online and see if I can’t drum up some feedback from others.

Line 801 – Loan Origination Fee on your GFE is fee charged by the mortgage company for doing your loan. The fee is usually a percentage of the loan amount but may be a flat fee in some cases. The amount varies widely though depending on the loan type, credit score, and state where the property is located. For example, in Arkansas (where I live) the fee is usually around 3% on bad credit loans and 1% on FHA loans. In Mississippi though, a bad credit loan may cost 6% or more. The primary difference between the markets is state law, as Arkansas limits the amount that can be charged for a loan, and line 801 is usually the first place cuts are made.

This number is also where your loan officer / loan originator receives his/her pay (as a percentage). Most loan originators make somewhere between 35% and 70% of the figure on line 801. As a result it may be difficult to get that amount lowered as no one likes to give away their paycheck. Also, some mortgage brokers will not allow any of their loan originators to drop below a preset amount.