Closing costs are still in the realm of the "great unknown" for most consumers when it comes to financing or refinancing their home. Most consumers are misguided in their belief that closing costs aren't necessary and if they "argue" with their broker/lender, they can get a no closing cost loan.

There is good news and there is bad news. First the good news. If you are refinancing, your closing costs will be lower than a typical purchase loan and you get to finance them into the loan itself and typically won't have any out of pocket expenses.

The bad news is for folks purchasing a home. Most lenders require closing costs paid at settlement and you typically can't roll these costs into the price of the home. There are a few lenders out there who have in fact allowed closing costs to be "stacked" on top of the financing after the fact but these programs are slowly being phased out as part of the new economy that currently exists. Even though I say this is bad news for a home buyer, there is still some light at the end of the tunnel.

Sellers can contribute up to 6% of the purchase price to the buyer in most states for closing costs and/or down payment assistance. On a $250,000 home price this amounts a whopping $15,000. The typical total closing costs (minus down payment) on this size loan will be somewhere between $3,000 and $10,000 depending on state and costs associated with the loan. The seller's contribution would more than cover those amounts. Seller contributions are the best way to minimize your closing costs but there are other ways you minimize in addition to seller contributions.

Title/Escrow companies typically have to set their fees and report the fees they charge to the insurance commission so they aren't as flexible in offering discounts as you might think. However, there are some discounts your title/escrow officer can offer you. You can ask for a first time home buyer credit if you haven't owned a home within the last 3 years. You can also bring in a Settlement statement (HUD1) from a previous title/escrow transaction (within the last 2-3 years) and you will be given a discount by many title/escrow companies. It pays to ask either your loan officer to find out what discounts you qualify for if he/she orders your title work or ask your Realtor. If you feel you are getting no where with either of them, call the title company directly.

In some municipalities you can get discounts for retrofitting your home with eco friendly equipment.

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