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Simple English definitions for legal terms
loan-brokerage fee
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A quick definition of loan-brokerage fee:
A loan-brokerage fee, also known as a mortgage discount or point, is an upfront charge by a lender at a real estate closing for the costs of financing. It is the difference between the mortgage principal and the amount the mortgage actually sells for. Usually, the buyer pays this fee, but sometimes the seller pays it when required by law, such as with a VA mortgage.
A more thorough explanation:
A loan-brokerage fee, also known as a mortgage discount or point, is an upfront charge by a lender at a real estate closing for the costs of financing. It is the difference between the mortgage principal and the amount the mortgage actually sells for.
For example, if a borrower takes out a $200,000 mortgage with a 1% loan-brokerage fee, they will have to pay an additional $2,000 at closing. This fee is usually paid by the buyer, but in some cases, it may be paid by the seller.
The loan-brokerage fee is used to cover the costs of originating the loan, such as processing and underwriting fees. It is important to understand this fee when shopping for a mortgage, as it can significantly impact the overall cost of the loan.