Home buyers should always consider shopping around for mortgage lenders, however this isn't the only thing you should consider. It's not entirely about interest rates and whatnots but also about how they will implement closing costs. Closing costs is a general term for the fees that you pay in order for your loan to get approved and other miscellaneous fees that are necessary to finish the home buying process. It's one of the easiest fees to forget about, but its also something that could take a chunk out of your pocket. Being taken by surprise by these fees will mean that you'll need to produce the money through borrowing from family and friends, or it would reduce the budget cushion you've been saving for other domestic emergencies.

After you've submitted your loan application, a lender is required to give you a GFE (Good Faith Estimate) of the closing fees. Take note that these are just estimates so it's still best if you pad the numbers a bit just to make sure you don't come up short when it's time to pay. The GFE is actually just a list of things that you need to pay. Some are in finance lingo and codes that you probably won't understand especially if it's your first time to buy a house. Some of the items in this list would be fees originating from the lender, and some would come from third parties. To find out which is which, all you need to do is ask the lender.

Sit down with a representative (or you can also ask your mortgage broker) and go over the list with them. Point out each item on the list and ask what the item means. Items that originate from the lender can still probably be negotiated with them. Make sure that you ask the representative or your mortgage broker about which items originating from the lender are negotiable and if they can arrange this for you. Some items originating from third parties can be minimized by hiring your own third party company to handle the item in question. For example, the lender probably has a preferred third party to handle title insurances but if you know another company that can offer a better deal, then there should be no problem with you getting the services of this third party company instead. You may end up saving more money this way if you are able to find a company that is willing to give you a lower rate for the same service.

To help people with closing fees, some lenders offer the option to work the closing fee into the mortgage, which means that you'll pay a slightly higher amount the first few months in order to cover the amount of the closing fees.

Factor the closing cost into your budget while you're still in the phase of saving up for the downpayment. This way you can deal with unpleasant surprises and be more confident about closing the purchase without much hassle.