Mortgage closing costs are the fees you pay above the purchase price when you settle a home loan. They are also called settlement costs and are considered the price of the loan. Closing costs are made up of numerous different charges. Many of them are legitimate, but some are junk fees you shouldn’t have to pay. When securing a mortgage, it’s important to comb through your closing fees to make sure they are normal and appropriate. You can negotiate with a lender for certain items to be reduced or eliminated.

Here are some legitimate closing costs you should expect to pay:

Application fee—This covers the cost of processing the loan and running credit checks on the loan applicants.

Loan origination fee—Sometimes called the loan-processing fee, this covers the lender’s cost for preparing the loan and can include the fees for the lender’s attorney, document preparation and other costs. (Usually this is between 1% and 1.5% of the loan amount)

Points—One point is equal to 1% of the loan amount and buys down the interest rate on the loan by 0.25%. You do not have to purchase points.

Appraisal fee—This pays for an appraiser to determine the worth of the property and ensure it is at least as much as the loan amount to protect the lender. Some lenders will absorb this cost.

Inspection fee—In some cases a lender may require its own inspection to verify the condition of the property and protect their investment. Homebuyers should get their own inspection as well.

Title search and insurance fees—The title search pays for the cost to research the properties title to verify that there are no outstanding liens against the property. A title insurance policy protects the lender (and the owner if opted for) in case the title search is wrong and a lien situation arises.

Survey fees—In some cases a survey is required so the lender can verify the home is actually in its proper location. This protects the lender from fraud.

Recording fees—These fees are paid to the state and local government to record the transfer of ownership. In most cases, recording fees are low.

Homeowners insurance—Most lenders require a full year’s worth of homeowners insurance be paid up front. You can purchase a separate homeowners insurance policy and provide documentation that it has been paid, however.

Prepaid interest—You have to pay interest for the remainder of the closing month upfront. For example, if you close on June 15th, you will have to prepay interest for June 15 through the 30. Your first mortgage payment will not be due until August 1, however. How much you pay in prepaid interest depends on what day of the month you close, the purchase price of the home and the interest rate on the loan.

Private mortgage insurance (PMI)—If you put down less than 20% of the home’s purchase price you will have to pay PMI, which protects the lender if you default on the loan. This is usually equal to 0.5% of the loan amount and can be paid upfront at closing or in monthly installments.

It’s wise to compare fees between lenders when shopping for loans. Use the Mortgage Rate Search tool from BankingMyWay.com to find mortgage offers in your area.

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