Closing costs consist of two distinct types, recurring and non-recurring costs. Recurring costs are those which happen every month (taxes, insurance, mortgage insurance and interest ) during the life of the loan.

Non-recurring costs are those which are paid just one time, like points, loan origination fees, lender's title insurance, loan processing fees, credit reports, etc. Generally speaking a good rule of thumb is 3% of the loan amount. (This does not include points used to buy down an interest rate.)

There are two ways to "get rid" of these closing costs. One is for the seller to pay them on behalf of the buyer (which usually results in a higher sales price to cover the cost). The other is for the lender to raise the loan interest rate and "absorb" the costs. This is particularly effective for someone who is not going to stay in their home long or for someone who is going to pay the loan off quickly. But you have to make sure there is no pre-payment penalty on the loan before going this route.

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