How to Keep Mortgage Loan Origination Costs Down in 2025 

As American consumers struggle to keep pace with inflation, mortgage lenders are dealing with similar challenges. Loan origination costs have been on the rise for several years.

According to Freddie Mac, average loan origination costs rose by 35% from 2021 to 2024. Meanwhile, Q1 2024 marked the eighth consecutive quarter of lenders’ net production losses, with the average lender facing a net loss of $645 per loan. 

If rising origination costs are cutting into your bottom line, you may be looking for ways to save in 2025. Keep reading to find three effective strategies to streamline your costs and preserve your profits.  

#1 Optimize Your Loan Origination Process  

From Fair Isaac Corporation’s (FICO) price hikes to ongoing inflation, many external factors are outside of your control. Fortunately, these aren’t the only factors influencing your loan origination expenses – your operational efficiency also plays a notable role.  

So, how can you ensure optimal operational efficiency? You need to start by outlining the stages of your loan origination process. After that, you can analyze each step and determine: 

  • How long your loans stay in each stage.  
  • If there’s any unnecessary friction, bottlenecks, redundancies, or delays.  
  • The root cause of these inefficiencies.  
  • How you can automate more tasks and encourage more collaboration among your team.  

If you’ve never conducted a workflow optimization assessment before, you can always enlist the support of your credit partner. Since they work with so many lenders, they may have insightful suggestions on how to create more cost savings in your loan origination process.  

#2 Automate Manual Processes 

As you optimize your workflows, you’ll likely make many adjustments, from reordering loan origination steps to reallocating staff to key tasks. However, one of the most effective ways to drive efficiencies and achieve rapid cost savings is automating repetitive, time-consuming tasks. 

Automation has helped countless mortgage lenders save money by speeding up their loan origination process, streamlining their workload, and enhancing their data accuracy. If you want to reap these cost-saving benefits, consider automating the following tasks: 

  • Verification of Income and Employment (VOE) – Manual VOE can introduce frustrating delays into your loan origination process. After all, tracking down applicants’ employers and getting them on the phone can take several days or weeks. What’s more, these employers may not always provide accurate information. By automating your VOE process, you can eliminate these inefficiencies once and for all. Automated VOE solutions work by requesting verifications from a variety of third-party vendors on your behalf, alerting you as soon as one returns a hit. Many of these solutions integrate with leading instant hit providers, enabling you to verify applicants’ data in minutes. Not only is automated VOE much faster, but it also ensures greater accuracy by eliminating the risk of transposition errors and employer mistakes. 
  • Lead Generation – Another task that may be taking up a lot of your time is lead generation. While acquiring a steady stream of applicants is crucial in today’s highly competitive lending market, some client acquisition initiatives are costlier than others. While you can attract more leads through tailored marketing campaigns, paid advertisements, and strategic networking, you can also outsource some of your lead generation to automated tools. For example, continuous credit monitoring solutions can deliver qualified leads to you on a silver platter for a low price. These tools work by monitoring your current borrowers’ credit files for signs that they may be in the market for a new mortgage, refinance, HELOC, or home equity loan. After you uncover these leads, you can reach out to them promptly and attempt to win over their repeat business. 
  • Credit Report Ordering – As mentioned earlier, FICO has steadily increased its prices in recent years. Thus, lenders with tight profit margins can no longer afford to purchase unnecessary tri-merge credit reports. The challenge lies in determining which applicants truly warrant these costly reports.Automated credit report ordering tools help you navigate this process. They pull reports from one bureau at a time and compare applicants’ data against your stated credit thresholds before initiating additional orders. For example, if an applicant’s one-bureau report shows that they’re well below your thresholds, you can avoid pulling more reports and save that money for applicants who showcase stronger creditworthiness. By taking a more cost-conscious approach to your credit report ordering, you can eliminate unqualified borrowers as affordably as possible and save your precious resources for those who are most likely to close. Leveraging automation can also help you save time and enhance the accuracy of your lending decisions.  

#3 Select Your Vendors Strategically  

While the right mortgage lending solutions can help you save a substantial amount of money, you want to make sure you’re accessing these tools in a cost-effective manner.  

Some common mistakes lenders make include purchasing their mortgage technology a la carte when they could be leveraging more affordable pricing bundles or working with vendor partners that don’t offer cost-saving solutions.  

You can identify vendor partners that are committed to helping you reduce your costs by: 

  • Making sure they understand the industry’s current cost pressures and how they’re impacting mortgage lenders. 
  • Asking them about their budget-friendly pricing options, such as discounts on bundled solutions or pricing tiers for feature-rich products. 
  • Requesting case studies or references that demonstrate how their solutions have helped other lenders save money and improve their operational efficiency. 

Start Saving in 2025 

In summary, you don’t need to settle for surging loan origination costs in 2025. You can achieve meaningful cost savings by taking matters into your own hands. You simply need to take a strategic approach to your workflow optimization, use of automation, and vendor selection.  

By being proactive and leveraging the right tools, you can streamline your operations and safeguard your profits in an increasingly challenging market. 

Written by: Paul Robinson VP, Sales at Certified Credit 

Sources: 

Mortgage Bankers Association. IMBs Report Net Production Losses in the First Quarter of 2024. 

Freddie Mac. 2024 Cost to Originate Study: How Technology Impacts Savings, Cycle Time and Revenue.