That is a great question…
There are actually three general parts to closing costs.
The first is the lender fees. Each individual lender charges an amount to cover their own costs in the transaction. This could be processing, application, underwriting and other minor miscellaneous fees. The lender will be able to explain their costs upfront. Even before the loan application is completed.
The second is the third party fees. These include appraisal, government recording fees, credit, automated underwriting, transfer stamps, attorney fees, flood certification, condo questionnaire and lastly the title fees. These fees can be estimated by your lender upfront. The title fees will be the most difficult due to some states allow the seller to decide which title company to be used in a purchase transaction. That title company typically wont be known till after the loan application is done. In a refinance, the lender can help you find the least expensive to work with.
Lastly is the pre-paids items.These items are many times forgotten but are a huge part of the buying process. When you purchase a home and you escrow for taxes and insurance, the lender will add monies into an account to pay these items when they are due. The other pre-paid item is interest till the end of the month. When you purchase a home you will normally not have to make a payment till the following full month. The money necessary to pay these items will be collected at the closing along with the down payment and other costs.