You'll have your best chance getting lenders to lower items in the HUD-1's "800" section, as banks generally control those charges. (Outside vendors set some 800 fees, such as those covering home appraisals and credit reports.) You can also sometimes haggle on certain "1100" charges such as settlement and title-search fees, or even find a title company on your own to offer those services at a price you like. Da Costa says you should focus less on how much a bank wants to charge for each individual item, though, and more on the total closing costs you're paying.
One of the easiest ways to avoid junk fees is to apply for a mortgage with several lenders and simply see who's offering the best deal. Da Costa suggests applying with three different types of loan sources -- one big bank, one small bank or credit union and one mortgage broker (who will suggest a mortgage for you from among several lenders). But beware: Many lenders charge nonrefundable application fees. Da Costa recommends sticking to those who won't charge you a nonrefundable fee before giving you a Good Faith Estimate. Also bear in mind that lenders who offer low fees might charge higher mortgage rates, or vice versa. You'll have to consider both closing costs and mortgage rate when looking for the best deal. One easy way to compare two loans is to look at each one's "annual percentage rate" (or APR), which factors in interest and closing cost. You'll find each mortgage's APR on a "Truth in Lending Act" disclosure form you'll get within three days of applying for a loan. The APR only tells you how much you'll pay if you keep a mortgage for its full term, though -- usually 30 years. If you plan to sell or refinance before then, you'll have to compare what each loan will charge you over a smaller number of years. Online tools such as LendingTree.com's Mortgage Loan Comparison Calculator can help. Compare costs to your state's average
To get a rough idea of how a loan's closing costs stack up with industry averages, check out Bankrate.com's latest Closing Cost Survey results for your state. "The survey can help consumers get an idea of whether they're being overcharged," da Costa says.