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Simple English definitions for legal terms
new-loan fee
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A quick definition of new-loan fee:
New-Loan Fee: A fee charged by a lender when a borrower takes out a new mortgage. This fee is also known as a mortgage discount or point. It is the difference between the mortgage principal and the amount the mortgage actually sells for. The fee covers the costs of financing and is usually paid by the buyer, but sometimes the seller may pay it if required by law.
A more thorough explanation:
A new-loan fee, also known as a mortgage discount, is the difference between the mortgage principal and the amount the mortgage actually sells for. It is an up-front charge by a lender at a real-estate closing for the costs of financing.
For example, if a borrower takes out a $200,000 mortgage but the lender only gives them $195,000, the $5,000 difference is the new-loan fee or mortgage discount. This fee is usually paid by the buyer, but in some cases, the seller may be required by law to pay it, such as with a VA mortgage.
The new-loan fee is also sometimes referred to as a point, mortgage point, loan-brokerage fee, or discount fee.