Is My Processing Fee Normal?
A processing fee of $200 to $600 is common, but whether it's justified depends on what other lender fees you're paying. If you're also paying an origination fee, the processing fee may be duplicative — and removable.
When processing fees are legitimate vs. junk
A processing fee is legitimate when it's the only lender fee you're paying — some lenders charge a flat processing fee instead of a percentage-based origination fee. In that case, $400 to $600 is reasonable.
A processing fee becomes a junk fee when it's charged on top of an origination fee. Processing — collecting documents, ordering verifications, assembling the loan file — is a core part of origination. Charging separately for it is like a restaurant adding a 'cooking fee' to your meal.
How to challenge a processing fee
Email your loan officer: 'My Closing Disclosure shows a $X processing fee in addition to the origination fee. Could you explain what the processing fee covers that isn't already included in origination?' Most lenders will remove or reduce it rather than justify the duplication.
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Frequently asked questions
What is a normal processing fee?
Processing fees range from $200 to $600. If it's the only lender fee, this is reasonable. If you're also paying an origination fee, the processing fee is likely duplicative.
Can I get the processing fee removed?
Yes. If you're paying an origination fee, a separate processing fee is duplicative. Ask in writing for removal or a detailed explanation of what it covers beyond origination.