You can negotiate a loan even after you contact a lender.

Just like getting a new car, it pays to shop around. Even for a mortgage, it pays dividends to find the right loan for you.

"Many times consumers take the first deal offered to them," says Doug Lebda, founder and chief executive of LendingTree. "They don't realize shopping around and negotiating are the ways to get the best deal."

As a home buyer you can expect a lot of fixed fees and cost associated with getting a loan. The appraisal, credit report, and flood certificate are usually fixed third-party fees, but there is some room wiggle room to negotiate the other items.

"You can't negotiate fees from the lender, but sometimes you can get the mortgage broker to waive the application fee or the processing fee," says Patti Frank, vice president at Americana Mortgage. "Banks have to be equal to everybody. They can't give this guy a break on certain fees and not the other guy." While getting a mortgage broker to waive the application fee or processing fee may seem minuscule -- every little bit helps. According to Frank, both fees can cost anywhere from $200 to $500.  I just want to add to Ms. franks statement that in California it is illegal to charge an application fee..  It is free to apply for a mortgage unless you have sub-prime credit.  Clients with FICO scores ranging from 500-639 should expect to pay a $200.00 - $250.00 upfront application fee. However  that fee should be reimbursed if loan closes/funds.  If you are a sub-prime borrower check with the lender on what his/her policy is.

For buyers worried about the amount of money needed at closing, they can reduce costs if they find a bank that isn't impounding real estate taxes and homeowners insurance. Often lenders will escrow six months of real estate taxes and three to four months of home owners insurance premiums, which could add up to a large sum on top of all the other costs.

Buyers should be watching the 10 Year Bond.  If the bond drops 6 points in one day they can expect an .125% drop in rate, or 1.00% point increase of lender credit.

If the bond yield drops 15 basis points in one day, you as a borrower could lock in a rate .250 -.375% better than the previous day, or again opt for a little higher rate and get more lender credit back to help with closing cost.  A lot of loan officers aren't watching the 10YR closely so that can be a great advantage an a significant amount of money for you.

Another area to save in the home-buying process is with escrow fees. Escrow companies charge differently.  Escrow companies charge a flat fee but it's based on the loan amount.  Each company has different pricing for each tier. Because the prices can vary, mortgage experts recommend calling several Escrow Companies and getting their rates and what's included before deciding on who to work with at closing.  Also please note on a purchase if the seller is choosing the Escrow company, then the seller has to cover it.  If the buyer chooses the Escrow company, then the buyer has to pay for it.
 
Total closing costs should be less than 3% to 5% of the purchase price--anything above that may mean the borrower is over paying.  If you are purchasing a home, you can negotiate with the seller to credit you a certain percentage, or dollar amount of the proceeds to help with your closing cost.

The experts admit negotiating a mortgage is easier said than done because the terms can be so complex and overwhelming for the borrower.  As a borrower you need to educate yourself before committing to a lender.  Yes here in California a $400,000.00 FHA 30YR FX mortgage will have close to $20,000.00 in total loan fees.  So be prepared to accept it, see what fees can be negotiated, and what fees are being rolled into the loan, and what is being covered by the seller if it is a purchase.

To start borrowers need to ask a variety of lenders for a good faith estimate to find the best rate. A good faith estimate will lay out all the costs associated with the mortgage and the buyers should review each estimate line by line and see what can be negotiated.  Some of the fees you can negotiate are the underwriting, processing, administration, and courier fees.  It is best to shop multiple lenders but not just to get the best possible rate, or the lowest amount of closing cost, but also ask how fast are the turn times for closing.  If you have a rush on a purchase contract it might be worth $200.00 more for a 7 day closing.  And yes I have seen loans close in a weeks time.