What is a loan origination date?

Question

From Investopedia we have the definition of a loan origination:

Origination is the multi-step process that every individual must go through to obtain a mortgage or home loan. The term also applies to other types of amortized personal loans. Origination is often a lengthy process and it's overseen by the Federal Deposit Insurance Corporation (FDIC) for compliance with Title XIV of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

However, I would like to know what is the loan origination date. Given that the origination is a lengthy process, what does one usually mean by its date? Is it the start of the process, the date the money appears on your account, or something else?

Answer 1

After the loan as been approved, the origination date is the date on which you receive the money. This is also the date on which interest begins to accrue.

Answer 2

If the lender approves the loan, the loan origination date is the date when the loan is funded. In other words, the day the borrower receives the money in the account.

After loan origination, the loan closing process or settlement takes place, the funds are deposited into the borrower's account and the title transfer process begins. The loan origination fee, typically 1% of the loan, often covers this process.

The loan origination process from the borrower perspective has many steps, including:

Loan application — The borrower fills out a loan application form.

Documents — Either during the initial application or after pre-approval, the buyer submits documentation to verify income, employment, and financial status.

Creditworthiness — The lender screens the loan application. This verifies the buyer’s credit score. It also determines if the buyer’s income and financial status qualify the buyer for the loan.

Negotiation — This stage doesn’t always happen, but sometimes there are opportunities to negotiate more favorable loan terms.

Finalize loan application —Both parties agree on the terms. Then, the loan application is processed by the lender following the steps in the previous section of this page.

Loan approval — After final processing, the lender decides to approve or reject the loan application.