How much is too much? With mortgage closing costs, it’s hard to tell.

Lenders, brokers and third-party providers of closing services charge all kinds of fees to mortgage hunters. And because those fees vary widely from state to state, market to market and even lender to lender, consumers can have a tough time figuring out whether their lender is giving them a fair shake.

But a new survey should help. During the first half of 2001, the company’s researchers gathered closing cost information from 103 lenders and brokers in 10 states. The survey contains data on the average, highest and lowest charges found for everything from document preparation to title insurance coast to coast.

Arm yourself with knowledge

Consumers can use the information to bolster their negotiating position. After all, while lenders hate to admit it, getting a mortgage is similar to buying a car. Borrowers who know what their mortgages “should” cost before they visit their lenders’ offices have a better chance of getting the best deals.

“Education is key to not getting ripped off in the real estate process,” says Rick Harper, director of housing at the Consumer Credit Counseling Service of San Francisco.

Comparing one mortgage to another isn’t as easy as just comparing rates. Borrowers need to shop all three major components of a loan’s price — rates, points AND fees — before selecting lenders.

Why? Mortgage companies often do the same thing car dealers do to make money off consumers. Just as a dealership can charge a lower finance rate but jack up the price of the car, a mortgage lender can charge a slightly lower-than-average interest rate or fewer points, but make it up by tacking on so-called “junk” fees. Forget about fees and you may end up subsidizing the loan officer’s shiny new Camaro rather than getting the best deal on your loan.

“A bank has a cost of getting a loan done and they’re going to make that cost up somewhere,” says Steven Schnall, chief executive of New York-based New York Mortgage Company LLC. “If you find that a bank is very ready to negotiate fees, you may also find the bank is charging a slightly higher interest rate.”

A maze of mortgage costs and fees

Comparing closing costs isn’t as easy as it sounds. Some lenders give fees a wide variety of names in an effort to confuse consumers. One might advertise that it doesn’t charge an “application” fee up front, for example. But it makes that up by charging a “commitment” fee or “doc prep” fee at closing.

Other companies try to look cheaper by charging an all-inclusive “processing” fee. But they may charge $900, whereas a lender that itemizes might only charge $200 as an “application” fee, plus $300 as a “funding fee” and $250 as a “review fee” — $750 total.

When people call and ask specifically about closing costs, unscrupulous lenders and brokers may even quote only their fees. That conveniently leaves out the hundreds or thousands of extra dollars in other costs the borrower will have to pay.

Consumers trying to make the best of the less-than-ideal, mortgage-shopping world will find’s survey useful. It contains information on three of the four major closing-cost categories: lender/broker fees, third-party fees and government fees.

Lender/broker fees include charges for document preparation, underwriting and origination, while third-party fees include charges for title searches, flood certifications, appraisals and the like. Government fees include recording taxes and other charges assessed by local and state agencies.

Borrowers will find information on the first two categories the most useful. Lender/broker fee information is helpful because “doc prep” fees and other similar costs are negotiable. Borrowers who know what lenders are charging, on average, to process loans can determine if they’re being overcharged and, if so, demand lower prices.

“Different companies have different names for different fees, but really what they are all trying to cover is the costs for processing, underwriting and making a loan,” says Schnall. “If you add them all up, you can compare one lender to another.”

Third-party provider data, meanwhile, can help because some lenders let borrowers choose their own title insurers, appraisers and such. Consumers willing to invest the time and effort may find they can save money by choosing their own closing-service providers.

Not all lenders will play ball, though, and those who do usually have “approved provider” lists. A customer would have to make sure an appraiser is on the list, for instance, before paying $300 for the person’s services.

“The title insurance, as a consumer, that’s your call,” says Mark Ulmer, senior vice president of home loans field operations for Seattle-based Washington Mutual Inc.

“Typically, what happens when you’re going to buy a house and you’re going through a Realtor, they know what title insurance companies do the best in the market and they want to control that. But you as the buyer, you’re paying that and it’s between you and the seller in some cases. You can go out and shop around title companies.”

With appraisals, “It’s up to the lender as far as determining the value that they should be using to make their loan. You could go down the block and find Joe the Appraiser and he’ll do it for $100, but Joe doesn’t know anything,” he says.

“We have approved appraisers that we will accept appraisals from. We’re not doing appraisals for the buyer. We’re not doing it for the seller. We’re doing it for us. We need to make sure we’re protected.”

Government fees final

Information about charges that fall into the government category and the fourth closing-cost group — escrow/interest fees (otherwise known as “prepaid items” or “prepaid amounts”) — isn’t as helpful.

State laws, the time of month the loan closes and the due date of taxes and insurance, among other things, determine those charges. That means lenders and private-market, third-party providers have no say in the matter and can’t be convinced to lower those prices.

When trying to negotiate fees that can be changed, however, some borrowers will likely find they have more pull. A perfect-credit customer in the same job for many years who wants to buy a cookie-cutter suburban home, for example, has a good shot at getting lower processing and appraisal fees.

That’s because the lender can do much of the application processing electronically and the appraiser may just be able to perform a “drive by” appraisal. A shopper with subprime credit who is self-employed and looking to buy a dome house in the Colorado mountains, however, requires much more hand-holding and lender man-hours.

The hard truth

No matter what, consumers have to be realistic. Lenders, appraisers, credit reporting agencies and other parties to a mortgage transaction have to make a certain amount of money to cover their cost of doing business and turn a profit. Some fees simply can’t be avoided, and customers who won’t accept that may be told to take a hike.

“When a bank is making a loan, often times a bank sells the loan to another institution. They may incur a fee, maybe $100 or $200. They also incur wiring fees. If you go to a mortgage banker for a loan and they use a line of credit, they’re going to incur fees,” says Schnall. “As far as courier fees, most lenders will charge one and it’s because when you’re processing a loan, a lot of things have to be shipped from here to there.

“All lenders have these fees,” he adds. “They’re not necessarily profit centers for these lenders, they’re just ways for lenders to cover the cost of these processes. You can only go so far and there’s a point at which somebody’s not willing to do a loan.”

Still, consumer experts say borrowers shouldn’t be afraid to ask for reasonable closing cost breaks. And no matter what, don’t accept a lender’s “that’s just the way it is” answer when asking why your good faith estimate shows $5,000 in assorted fees for a $100,000 mortgage.

“Question all the fees. Ask about it: ‘Is it required? What is it?'” says Harper, the San Francisco housing counselor. “We’re talking big bucks, and it’s easy for someone to slip in $300 for this or $400 for that.”