Since Dodd-Frank was signed into law during the summer of 2010, mortgage lenders must charge the same origination, underwriting, administrative and doc-preparation fees (often referred to as "junk fees") to each of their customers. If they don't, they're violating federal law.
However, savvy consumers can still negotiate some of their closing costs. There are still plenty of third-party fees that borrowers can shop around for and negotiate.
"It's very common for the public to think that they can still negotiate lender fees," says Dan Green, a loan officer with Waterstone Mortgage in Cincinnati. "You can't expect the public to be up to date on mortgage laws. The reason for the reforms was to make sure that every customer was treated the same way, that everyone pays the same fee for the same service."
In its 2013 survey of closing costs, Bankrate reported that people buying a $200,000 home pay an average of $2,400 in lender and third-party closing costs. On a purchase, the Federal Reserve Board estimates that closing costs run an average of 3 percent of the home's sales price, and can range from 3 percent to 6 percent of an outstanding loan balance for a refinance.
Closing costs: Which ones can I negotiate?
Lender fees: No
Your lender will charge fees for a wide range of services. This can include underwriting fees, application fees, document-preparation fees and processing fees.
According to Bankrate, mortgage originators charged an average of $1,730 in lender fees in 2013. These fees will vary by lender, but they can no longer be negotiated down. If your lender charged $1,500 in total lender fees to one customer, it must charge the same to you.
But, as Fred Glick, broker/owner of US Loans Mortgage in Philadelphia, says, consumers might find a mortgage lender that will charge as little as $500 or so less in lender fees. The key is to keep shopping; you're allowed to work with any mortgage originator licensed to do business in your state, no matter where physical offices are based.
Title insurance: Yes
Title insurance protects your lender in case you have any undiscovered liens against your property. This fee can be costly. Frank Pellegrini, owner Prairie Title Services in Oak Park, Ill., says that a title insurance policy -- including the search of public records that a title company performs -- should cost about $1,500 on a $250,000 home. A title policy for a refinance should cost about $700. You can shop around for lower costs and you can negotiate this fee.
"This is a competitive industry," Pellegrini says. "You should absolutely shop around. We field calls every day from consumers asking about our rates."
Pellegrini says that title insurance rates can vary by as much as 5 percent, so shop around.
Before a lender loans you money or refinances your home, you'll need to pay for an appraisal. This fee varies according to your home's size and location, but Realtor.com estimates that appraisals typically cost between $250 and $350 for an average home. Your lender orders the appraisal for you so you can't shop around and probably won't be able to negotiate the cost, either.
Home insurance: Yes
Lenders also require that you take out a home insurance policy before buying a home. This can be expensive. The Federal Reserve said that policies cost anywhere from $300 to $1,000 a year depending on your home and location. Since you can take out a homeowners insurance policy with any company you'd like, you can shop around. You can also take advantage of insurer discounts to reduce your costs.
Chris Hackett, director of personalized policy for the Property Casualty Insurers Association of America in Chicago, says that some discounts are worth more than others. Some companies might provide you with a discount of up to 15 percent if you buy a new home instead of an existing one. Some insurers provide a discount of 5 percent if you're a non-smoker, he says.
State taxes: No
You will have to pay state transfer and recording fees when you buy a home. These fees vary, but you can't negotiate them down or eliminate them.
So despite recent laws, you can still negotiate specific closing costs lower to help you save money when it's time to buy or refinance a home.
Dan Rafter has written about mortgage and real estate for more than 15 years. He's written for the Washington Post, Chicago Tribune, BusinessWeek Online, Business 2.0 Magazine, Consumers Digest and dozens of trade magazines.
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