Legal Definitions - new-loan fee

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.