Lender-controlled fees

The fees that the lender controls, and which are most subject to negotiation, are origination, discount, credit reporting, assumption, mortgage broker, tax-related service, application, commitment, rate lock, processing, underwriting and wire transfer.

If a fee seems vague or questionable, ask. Some mortgage companies include so-called junk fees that you can eliminate or reduce.

Third-party fees

There are some fees that cover services that the lender typically shops for. The lender is supposed to pass these fees directly to you without marking them up. These third-party fees include the settlement, closing or service fee; appraisal; abstract or title search; title examination; document preparation; notary; attorney; and title insurance.

You don't have a lot of negotiating room on these fees, but if one is much higher or lower than the comparable fee in a competing offer, ask for an explanation.

Fees for services that you can shop for

There is some overlap here with the third-party fees mentioned above -- specifically, the attorney's fees and settlement, closing and service fees. In some states, the closing is done by attorneys, and in other states, the closing is done at a title office. Either way, you can shop for a less expensive closing-service provider. You also are expected to shop for homeowners insurance instead of taking the lender's estimate as gospel.

Non-negotiable stuff

Your local and state governments will charge recording fees, tax stamps and transfer taxes. There's not much you can do to negotiate those.

Be skeptical

Lenders, especially those that are huge and operate nationwide, often have trouble estimating title insurance and government fees. Scrutinize these line items; the lender with the smaller estimate for title insurance or government fees might be inaccurate. National lenders have particular trouble estimating the buyer's cost for title insurance -- not because they estimate the price wrong but because of varying customs regarding who pays what. In one county the seller might customarily pay for title insurance, while in the adjoining county the custom is for the buyer to pay.

Remember, you can always negotiate with the sellers to have them split or pay outright some of the closing costs, points or fees. You don't have to follow the customs of your area.

Close at end of month

Because all mortgage loan payments are due on the first of the month, you can avoid or reduce the prepaid interest due by closing on or near the last day of the month.