I answered this the other day, and then got run over by technology, and it erased. SO, one more time.
There are Three different categories of closing costs:
The ones you CAN negotiate lower:
The ones you CAN NOT negotiate lower;
The ones you CAN negotiate lower, but SHOULDN'T!
AND, one BIG Caveat -> Your lender often has limits, built into the loan structure, on how much closing costs assistance you can get. You can lower some costs, but there IS a limit to how much you can have the other side pay.
THE ONES YOU CAN:
The Sales Price - Buyer & Seller - yes, No one thinks of this as a closing costs, but, really, its the biggest. Work hard on this; either raising it, or lowering it!
PMI - Buyer - one of those things that you can negotiate to ZERO. You just have to have 20% of the Sales Price.
Owners Title Insurance - Buyer - You have to buy Lender's title insurance; they rather insist. But, owner's title insurance may be unnecessary, if you have little equity in the property, if the title is clear and unlikely to have clouds; if you want to save a buck or two.
Liability Insurance - Buyer - Most insurers try to sell you insurance for the price of the sale. But, is the land going to burn down? Get insurance for the amount it would take to rebuild the home.
Transfer Fees - Buyer & Seller - I'm not sure why title companies charge more for wiring the money, than cutting a check, but they often do.
'Optional' Lender Fees - Buyer - Sometimes there are 'official' sounding fees on a lenders estimates, that are basically just extra profit, paid to themselves. Yes, Loan Officers should make money. But I recommend getting a couple of lenders estimates, then compare the lender fees (not the title or taxes; lenders have no control over those.) That way you will have an idea of what is necessary, and what is not.
THE ONES YOU CANNOT:
Taxes: Buyer & Seller - The email below is correct though; even though tradition states who pays what, seldom is it a matter of law. Even when it is, you can still ask the other side to pay for it.
Governmental Recodation of documents - Both -
PMI: - Buyer - if you don't have the 20% down.
Insurance: - Buyer- You WILL have to get some insurance for the property.
Lender's Title Insurance: -Buyer - They insist.
Loan Payoff and/or Penalty - Seller - Again, they insist.
THE ONES YOU CAN, BUT SHOULDN'T -
Inspections - Buyers - Inspectors range from $50 - $1000. You are about to make one of the most expensive purchases in your life. I'd get the best, toughest, most thourough inspector I could, no matter what the cost.
Commissions - Sellers & Buyers - Again, Big Sale, Big Purchase. I don't shop around for Brain Surgeons either. Take a look at figures, take a look at history. Are they productive? Do they Deliver? As a good book says, The workman is worthy of their hire; or as my daddy used to say, you get what you pay for.
I hope this helps you. You're about to make one of the biggest decisions in your life; and one of the scariest. I recommend that you hire the best; they're worth it.
And GOOD LUCK! Home Ownership is still the best and quickest way to build personal wealth! What other investment keeps the rain off? Keeps you warm in the winter? Gives you a place to put your stuff? Even if your home doesn't gain a single dollar in value (and most do), it still means you weren't paying someone else's mortgage during that period!