How to Negotiate an Origination Fee
- 1). Speak with a lender about various fee options to determine if origination fees are negotiable. Typically, there is some flexibility that lenders can exercise to adjust fees.
- 2). Consider a higher rate of interest in lieu of origination fees. Upon request, most lenders will increase the interest rate to eliminate or reduce origination fees. Ask the lender to display the advantages of paying a higher rate of interest versus keeping the prescribed origination fees.
- 3). Pay a flat fee versus an origination fee. Inform the lender that you are reluctant to pay an origination fee and offer to pay an amount that is below the equivalent origination fee. For example, if a lender requires that you pay a 2 percent origination fee on a $50,000 loan, the origination fee would total $1,000. You can negotiate by offering to pay a flat fee equal to $895.
- 4). Get quotes from multiple lenders in writing to compare origination fees. By comparison shopping, you may discover other loan products with lower fees. Most lenders will match competitor offers or allow you to negotiate lower fees.