Closing costs are the line items most buyers and refinancers never compare, even though they can move cash to close by thousands of dollars. Rate gets the attention, but the fee schedule behind it is where two similar-looking offers often diverge. Duane Buziak walks through seven tactics, with a worked dollar example, so you can see each cost side by side before you commit. Some tactics lower the bill outright, some shift cost into the rate, and one only changes timing. Knowing which is which keeps you from “saving” money that comes back later.
Duane Buziak, NMLS #1110647
1. Compare Loan Estimates from Multiple Brokers on the Same Day
Every lender or broker must give you the same standardized three-page Loan Estimate within three business days of your application. That standard format exists so you can compare fees line by line. It only works if the estimates were priced in the same window, because rates and credits move daily. An estimate from Tuesday and one from Friday are not a fair test.
Suppose, for illustration, two estimates on a $350,000 loan at similar rates. One shows $1,800 in Section A (origination charges). The other shows $4,200. That is a $2,400 gap before you have looked at title, recording, or escrow. A rate-only comparison would have called them equal.
- Get a soft credit pull mortgage pre-approval so you can shop without a hard inquiry on your report. A soft pull mortgage broker can price you from that pull, and a no hard inquiry mortgage pre approval lets you gather quotes without dinging your score.
- Ask each provider for a Loan Estimate on the same day, using the same loan amount, loan type, term, and lock period.
- Compare Sections A, B, and C, then the APR, then cash to close on page one.
This is the idea behind “Don’t Guess Your Rate. Shop It.” An independent broker can lay out options from hundreds of wholesale lenders side by side, instead of showing you one product.
Common mistake: comparing rates only, or comparing estimates from different days. What to measure: the total of Sections A, B, and C (Section D), plus cash to close, across every estimate.
2. Shop the Third-Party Services You Are Allowed to Choose
Section C of the Loan Estimate lists services you can shop for, typically title search, settlement or closing agent, survey, and pest inspection. If you use a provider from the lender’s list, those charges can rise by no more than 10 percent in total between estimate and closing. If you pick your own, the CFPB tolerance rules do not cap them, but the price you negotiated is the one you are anchored to. Section B services, such as the appraisal and credit report, are ones the lender selects, so those are not yours to shop.
For illustration, imagine title and settlement quotes of $2,150 from one provider and $1,850 from another for the same coverage. That is $300 saved with two phone calls.
- Ask for the written list of providers the lender or broker suggests.
- Call at least two, giving each the same address, loan amount, and loan type.
- Submit your final choice in writing and ask the broker to confirm the provider is accepted.
- Request a revised Loan Estimate if the Section C total changes.
Common mistake: assuming every service is shoppable, or choosing a provider the lender will not accept, which can delay closing. Government recording fees and transfer taxes (Section E) are set by the jurisdiction, so skip those. What to measure: the Section C total before and after shopping.
3. Negotiate or Challenge Origination and Lender Fees
Origination charges are not government-set. Underwriting, processing, and similar fees vary by provider, and some are negotiable. Under CFPB tolerance rules, the charges a lender controls generally cannot increase from the Loan Estimate to closing, which makes a revised estimate worth getting before you lock.
For illustration, imagine a borrower holding a competing written estimate with a $595 processing fee, against $995 on the first estimate. Asked politely, the first provider matches it. That is $400, and the borrower did it with documents rather than pressure.
- Ask for an itemized fee list so you can see each charge, not just a total.
- Share a written competing estimate, dated the same week.
- Ask for a revised Loan Estimate that shows the change in writing.
The mistake to avoid is winning a lower fee while accepting a higher rate. A $400 cut that comes with a rate bump of 0.125 percent can cost more over time. Always compare the full package, including APR. What to measure: the Section A total and the change in APR after the revision.
4. Trade Rate for Credits (and Know the Break-Even)
A lender credit is money the lender applies toward your closing costs in exchange for a higher interest rate. Discount points work the other way: you pay upfront to lower the rate. Neither is a discount in itself. You are choosing when to pay, now or through the payment, and the break-even tells you whether the trade makes sense for your hold time.
Here is a worked illustration on a $350,000, 30-year fixed loan. The rates are hypothetical, not quotes, and APR will differ by option.
| Option | Rate | Credit or points | Monthly principal and interest | Difference vs. par | Break-even |
|---|---|---|---|---|---|
| Discount point option | 6.00% | 1 point, $3,500 paid | about $2,098 | $57 lower | about 62 months |
| Par | 6.25% | None | about $2,155 | Baseline | Not applicable |
| Lender credit option | 6.50% | $3,000 credit | about $2,212 | $57 higher | about 53 months |
The credit option cuts cash to close by $3,000 but costs about $57 more each month. Divide $3,000 by $57 and you get roughly 53 months. If you expect to sell or refinance before then, the credit wins. If you plan to hold for fifteen years, it loses.
- Request rate sheets at par, with a credit option and a points option.
- Compute months to break-even for each.
- Compare that number to how long you realistically expect to keep the loan.
Common mistake: taking credits on a loan you will keep for decades. What to measure: break-even months against your planned time in the home.
5. Negotiate Seller Concessions and Closing-Date Timing
On a purchase, the seller can agree to pay part of your closing costs. Each program caps the amount. For a primary residence under Fannie Mae’s interested party contribution rules, the cap generally runs 3 percent of the price when the down payment is under 10 percent, 6 percent at 10 to 25 percent down, and 9 percent above 25 percent down. FHA and USDA generally allow up to 6 percent, and VA limits seller-paid concessions to 4 percent, separate from customary closing costs. These limits can change, so confirm them as of your contract date through HUD or your broker.
On a $400,000 conventional purchase with 5 percent down, a 3 percent cap means up to $12,000 in concessions.
Closing date matters for prepaids, which are not fees but costs you pre-fund, such as per-day interest. For illustration, at 6.25 percent on $350,000, daily interest is about $59.93. Closing on the 3rd means roughly 28 days of prepaid interest, about $1,678. Closing on the 28th means about three days, roughly $180. That lowers cash to close by about $1,500, but it is a timing shift, and your first payment is still due on the same date.
- Confirm the program’s concession cap with your broker.
- Write the concession amount into the offer.
- Coordinate the closing date with the closing agent.
Common mistake: exceeding the cap, which forces a reduction at closing, or counting prepaids as fees. What to measure: cash to close, and concessions used versus the cap.
6. Use Down Payment Assistance and Program Benefits That Cover Costs
Some programs reduce what you must bring to the table. Duane Buziak works with Dynamo and Turbo down payment assistance, the Homes for Heroes program, and a Physician Loan option. The details differ by program and borrower profile, and they change, so check current terms and eligibility before counting on any of them.
For illustration, imagine a first-time buyer who pairs a DPA option with a standard loan and brings far less cash to closing than a conventional 5 percent down plan would need. The trade is that assistance can come with a slightly higher rate, a second lien, or other conditions. Whether the trade works depends on the numbers, so it has to be compared, not assumed.
- Pre-qualify with no credit impact. A no credit hit mortgage application keeps your score intact while you explore options.
- Ask which programs you are eligible for based on income, credit, property, and occupation.
- Compare the DPA path against a standard loan: cash to close, rate, and monthly payment.
- Get the program terms in writing.
Common mistake: assuming programs combine automatically. Each has its own rules, and some cannot be used together, so confirm in writing what is allowed. Also avoid ignoring the rate impact of assistance. What to measure: cash to close and monthly payment, with and without the program.
7. Cut Escrow, Insurance and Tax Surprises Before Closing
Section G, initial escrow, is built from your insurance premium and property tax estimates. If the inputs are generic, the deposit is padded. Fixing the inputs lowers both cash to close and your monthly escrow payment.
Here is a labeled illustration. Assume a $400,000 assessed value, a 1.00 percent tax rate, and a $1,800 annual insurance premium. Monthly escrow is $333.33 for tax and $150 for insurance, $483.33 together. Now suppose a competing quote drops insurance to $1,400 and the county assessor’s page shows the real rate is 0.90 percent. Tax falls to $300 a month and insurance to $116.67, so monthly escrow drops to $416.67. With three months of taxes and two of insurance in the initial deposit, that deposit falls from $1,300 to about $1,133. The first-year premium paid at closing also drops by $400.
- Collect several homeowners insurance quotes before you lock in the Loan Estimate.
- Confirm the tax rate and assessed value on your county assessor or treasurer page, noting the as-of date.
- Review the escrow worksheet line by line with your broker.
Common mistake: using a generic tax estimate, or buying the policy after the Loan Estimate so the figures are stale. What to measure: the initial escrow deposit and the monthly escrow payment.
Ten Closing Cost Questions, Answered Directly
What are closing costs on a mortgage? Closing costs are the fees and prepaid items due to finalize a loan, including origination charges, third-party services, government fees, and escrow deposits. The Loan Estimate itemizes them in Sections A through H.
What is a Loan Estimate? A Loan Estimate is a standardized three-page disclosure showing your rate, payment, and costs. Providers must deliver one within three business days of application, per the CFPB.
Are prepaids the same as fees? No. Prepaids, such as per-day interest and the first insurance premium, are costs you pre-fund, while fees are charges for services.
Can closing costs go up after the Loan Estimate? Some can. Lender-controlled charges generally cannot rise, certain items can rise up to 10 percent in total, and others have no cap.
What is a lender credit? A lender credit is money applied to your costs in exchange for a higher interest rate.
What are discount points? Discount points are upfront payments that lower your rate, and each one typically costs 1 percent of the loan amount.
Does comparing lenders hurt my credit? A soft credit pull mortgage pre-approval does not create a hard inquiry, and shopping within a short window is generally treated as one inquiry by scoring models.
Can a seller pay my closing costs? Yes, within program caps, such as up to 3 percent on a conventional loan with under 10 percent down, as of 2026 guidelines.
Do I have to use the lender’s title company? No. Title services are generally in Section C, which you can shop.
Is the lowest rate the cheapest loan? Not necessarily. A low rate can come with high points or fees, so compare APR and the total of Sections A, B, and C.
Where to Start When You Have a Loan Estimate in Hand
Begin with side-by-side Loan Estimates and the rate-versus-credit break-even. Those two steps expose the biggest dollar differences. Then layer in service shopping and any program benefits that fit your situation.
Your dream home is within reach. Discover how much you could save with personalized mortgage rates tailored to your unique situation. Securely pre-qualify in minutes with no impact to your credit score and compare competitive offers from trusted lenders who are ready to help you save. Talk to Shop Mortgage Rates by Duane Buziak at 804-212-8663 to compare your options before you commit.