Closing costs are on the rise. People now pay around 6% more this year as compared to a year earlier. You don't have to pay through the roof, however. If you know what closing costs are, it will be easier to avoid them. Discussed below are the different types mortgage costs.

There are two types of closing costs: origination/lender charges and third party fees.

Origination/lender fees are paid with your loans origination. It takes a lot of time and money to make sure you qualify for a loan as well as to process that loan. Loan officers and processors work very hard for long amounts of time to get your loan closed in time, which will be repaid by you in the form of closing costs. These include line-items, application fees, rate and lock fees, origination points and so on. Of course you won't be asked to pay all of these, but definitely some. Different lenders charge for different things; so shop around.

Third party costs are the fees that are a pain to anyone who is not your lender. This includes the cost of an appraisal, the cost of your credit report, title company settlements and real estate agents. The thing about third party fees is that they are pretty much fixed-cost items. An appraisal will pretty much be around $300 across the board, and most Realtors charge around the same amount. You may be able to shop around and compare prices, but you'll probably only save $100 or so. So the best thing to do here is to make sure you get the bang for your buck. Look around on websites that give reviews of different Realtors and appraisers and make sure you're getting the best service possible.