What does "Loan origination" mean?

Definition

Loan origination is the entire process of a lender creating and issuing a new mortgage. This includes everything from the initial application to underwriting and funding the loan.

Understanding Loan Origination

Loan origination happens early in the mortgage process. It starts when a borrower submits an application and ends once the loan is approved or denied. This step involves gathering and verifying all necessary documents. For example, if you're applying for a $200,000 mortgage, origination is when the lender reviews your financial info to decide if they can lend you that amount. It's not the same as loan processing, which comes later and involves more detailed checks. A common misconception is that loan origination guarantees approval; it doesn't. It's about assessing if you qualify for the loan based on the information provided.

People Want To Know

Does loan originated mean approved?

Loan origination does not mean approved. Loan origination refers to the entire process of creating and issuing a mortgage, which includes the application, underwriting, and funding stages. Approval occurs during the underwriting phase, where the lender assesses the borrower's creditworthiness and financial situation.

What exactly does a mortgage loan originator do?

A mortgage loan originator guides borrowers through the mortgage application process. They help clients complete applications, gather necessary documentation, assess financial eligibility, and communicate with underwriters. Once approved, they facilitate the loan closing and ensure funds are disbursed.

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More From The Mortgage Glossary

Loan term

A loan term is the length of time you have to repay a loan, as specified in the loan agreement. Common mortgage loan terms are 15 or 30 years.

Loan-to-value ratio (LTV)

The loan-to-value ratio, or LTV, is a number that compares the amount of your mortgage to the appraised value of the home. A higher LTV, typically over 80%, may require you to pay private mortgage insurance.

Loss mitigation

Loss mitigation is the process where a lender works with a borrower who is having trouble making mortgage payments. This can include options like loan modifications, forbearance, or deferment to help the borrower avoid foreclosure.