Origination Fees on California Bridge Loans
Bridge loan origination fees are generally expressed in points, where one point equals 1% of the loan amount. North Coast Financial charges 1.25 to 1.95 points on California bridge loans. On a $500,000 bridge loan, 1.5 points would be a $7,500 origination fee paid at closing.
Origination fees are separate from the interest rate. The rate covers the ongoing monthly cost of borrowing. The origination fee is the upfront cost of setting up the loan. Together, they represent the total cost of the bridge financing.
At 1.5 points, the origination fee is $9,000. At a 10.45% rate, the monthly interest payment is approximately $5,225. If the loan is paid off after 3 months, the total cost is $9,000 + ($5,225 x 3) = $24,675. No prepayment penalty applies.
What the Origination Fee Covers
The origination fee compensates the lender for underwriting the loan, conducting due diligence on the property and borrower, preparing loan documents, and managing the funding process. Private lenders typically charge higher origination fees than banks because they move faster and accept loans that conventional lenders would not.
Origination Fee vs. Broker Fee
When a mortgage broker arranges a bridge loan, they typically charge a separate broker fee on top of the lender's origination fee. Working with a direct lender like North Coast Financial eliminates the broker layer and the associated markup.