Shop around before choosing a mortgage lender, but don't stop there. When you receive your good faith estimate of closing costs, or GFE, the negotiation hasn't ended.

The lender or mortgage broker is required to give you a GFE within three working days of accepting your loan application. The GFE comes in the form of an itemized list of estimated closing costs for everything from the lender's fees to the appraisal charge to the title insurance premium to a partial month's interest payment.

The lender or broker charges some fees, and third parties charge others. The first step is to find out which are loan origination fees and which are third-party fees. Don't guess. Ask the lender or broker.

The big money question
"Say, 'Please explain to me what those fees are,'" says Jessica Cecere, director of the Consumer Credit Counseling Service in West Palm Beach, Fla.

Simple advice, but a lot of loan applicants don't follow it.

On the GFE, fees are categorized by numerical codes ranging from the 800s to the 1300s. Most of the negotiable lender-charged fees are in the 800s: application, origination, commitment, loan discount, broker, tax-related service and underwriting fees.

Keys to lower closing costs • Ask for a justification for each lender-charged fee. • If the lender charges an application fee, ask if it will be credited toward closing costs. • If the lender charges an underwriting fee as well as a processing fee, ask for details of those services. Maybe you'll find a fee that can be waived or reduced. • Recognize that some items are non-negotiable: taxes, city and county stamps, recording fees, prorated interest and reserves. On the GFE, these items are in the 1000s and the 1200s.