Three buckets
Closing costs sort into lender fees, third-party fees, and prepaids. They behave very differently, and conflating them is how people end up surprised at the table.
Lender fees
Underwriting, processing, and discount points if you choose to pay them. These are set by the lender and are the most negotiable part of the quote.
Third-party fees
Appraisal, credit report, title insurance, escrow or attorney fees, recording fees and transfer taxes. Some are fixed by your state or county. Others — notably title and escrow — you're legally allowed to shop for, and the difference between providers can run into four figures.
Prepaids and escrows
This is the bucket people misread as a fee. Prepaid interest, the first year of homeowners insurance, and property tax reserves aren't charges for getting a loan — they're your own future expenses, collected up front. You'd owe that money regardless.
The document to read
Your Loan Estimate arrives within three business days of applying. Section A is lender fees, B is services you can't shop for, C is services you can, and F and G are prepaids and escrows. Comparing two lenders means comparing those sections against each other, not just the rate on page one.