A loan origination fee is what your lender charges to process your mortgage application. Typically 0.5-1% of your loan amount, this fee covers underwriting, document preparation, and administrative costs. It's one of the larger closing costs you'll encounter. Some lenders advertise "no origination fee" loans, but often build these costs into a higher interest rate instead, which may mean higher costs in the long run.

When comparing lenders, look at the total picture: origination fees, interest rates, and other closing costs to understand your true cost. Everything is negotiable, so don't hesitate to ask questions.