What is a key characteristic of fees that are included in the origination fee?

The key characteristic of fees that are included in the origination fee is that they are retained by the lender or the broker. The origination fee is charged by the lender as a way to cover processing costs associated with originating the loan. This fee is generally a percentage of the loan amount and compensates the lender or the broker for their services in putting the loan together and facilitating the process.

In contrast, other types of fees that might be incurred during the loan process, such as appraisal fees, title insurance, or credit report fees, are typically paid to third parties involved in the transaction. While some fees can be adjustable based on various factors or market conditions, the origination fee itself is meant to be a fixed charge that specifically compensates the lender or broker for their work. Understanding this distinction helps clarify what constitutes an origination fee and how it plays a role in the overall cost of obtaining a mortgage.