If you are working with a brick and mortar company - BoA, Wells Chase, It's like buying ice cream from the ice cream man that only has Neapolitan ice cream. You get Chocolate, Vanilla or Strawberry, that's all they have on the menu. If you go to a Loan Broker, that is like going to 31 flavors with all the toppings and they sell birthday cakes too. A loan Broker, and one from a larger company for that matter, has a multitude of money sources to shop your loan for the best terms and conditions for your application.
There is no such thing as a no cost loan. Banks don't give money away for free. You'll pay a higher rate if you follow the no cost loan strategy. The rates fluctuate daily and you will drive yourself nuts trying to figure out your rate before you can lock. It's going to be what it is, what it is when you go to lock. News, government etc. can cause changes in the market at any moment. I just looked at the rates on Zillow and they start at 3.750 and go over 4.0 for this moment in time.
Ask for a GFE. Once they issue that document they can't go higher in fees and rates, but they can go lower. And like anything else, you can shop fees to death, but if you save $500 and the lender you pick, screws up your loan and can't close your deal, you could lose your deposit. Looking for a seasoned professional, preferable with an office you can walk through the front door with some accountability and a good reputation is like buying a little insurance. You don't need a fire drill after you waive loan contingencies because someone promised you the moon for lower fees.
Here is a link to a Video walk through of the GFE. There area couple land-mines on that form so be careful. http://homebuysblog.com/2010/06/01/video-blog-gfe-2010-simi-
Here is an idea of who pays for what in California: http://homebuysblog.com/2011/08/11/who-pays-for-what-simi-va
One thing I have to stress is that California has different customs and laws in real estate transactions - vastly different than other states. What people do in other states really does not matter. What matters is how it is done where you are selling and buying a home. Our 17 day contingency period is standard across the state in our CAR form. 17 days was not an arbitrary number plucked from the skies. A battalion of attorneys and many many cases of litigation have lead to the formation of the CAR purchase agreement. Our contingency in our CAR purchase agreement as it sits right now is not passive. You have to waive those contingencies in writing (if you did not alter or amend the contract language). Yes that number can be negotiated. You have representation? If so, then the agent that is privy to all the ins and outs of your situation can make a far better consultation base on the situation at hand.
California gets even more interesting because the list of fees I linked in that article I linked, is what is customary for Ventura County. In northern California they do it much differently. Seek advise from season professionals who work the area your are transacting in.