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There are so many different costs. Finding the best price is very confusing. That is why it is important to get a written good faith estimate. The good faith estimate will give you an opportunity to look at the overall loan costs, including interest rates, points and fees of your loan. Consider all of these costs, not just the interest rate, when deciding on a loan. Also consider how long you will keep your loan. If you plan on keeping your home for a long time without refinancing, the interest rate takes priority. Try to get the lowest possible interest rate. If you do not think you will keep your home for a long time, or if you think you will refinance your home; don't spend a lot of money on fees in exchange for a lower interest rate.

Below are explanations of fees associated with mortgage loans.

Appraisal Fee - Because the lender wants to make sure the property is worth what you are paying for it, it requires an appraisal. An appraisal compares the value of the property to similar properties in the same neighborhood. These services are performed by independent appraisers and usually cost around $250 or more depending on the price of the property.

Attorney Fees - Both you and your lender will have attorney fees that you will typically have to pay. This fee covers costs for the attorney to draw up the documents and assure that everything is set up as it should be. Your own closing attorney will represent your interests and may be present at, or may facilitate, the closing itself. The closing attorney collects all fees, transfers the deed to the buyer, pays outstanding taxes and utility bills, pays himself and all other closing fees, and gives all remaining money to the seller. The attorney fees may range from $500 to $1,000 or more, depending on the purchase price of the property and the complexity of the sale.

Closing Taxes - Depending on the state you live in, you will have to pay anywhere from three to eight (or more) months' taxes at the closing, or place the money in an escrow account for later payments throughout the year. These will include prorated school taxes, municipal taxes, and any other required taxes. In some cases, you may be able to split these taxes with the seller based on when they are due. For example, you would only pay taxes for the months following the closing date up until the date the taxes had to be paid. The seller would have to pay for the months up until the closing date.

Deed Recording Fees - These fees pay for the county clerk to record the deed and mortgage and change the billing information for property taxes. These fees are usually around $50, but they do vary by area.

Discount Points - Buying discount points means that you are buying "down" the interest rate you will be paying. One discount point is equal to 1 percent of the loan amount. These points are paid either when the loan is approved or at closing. Buying points can save a lot of money in interest payments over the life of the loan, so investigate it when you're shopping around. Some lenders will let you add the cost of the points to your mortgage, or you may have the option of paying for them up front. You can also deduct those points from your federal income tax.

Document Preparation Fee - This fee may be included in the application or attorney's fee. It pays for the preparation of the mound of documents that have to be prepared and is usually a flat rate, but can also be charged as a percentage of the loan amount -- usually less than 1 percent.

Home and Pest Inspections - Your lender will probably require that the home be inspected to make sure it is both structurally sound and not being invaded by termites or other destroying insects. You may also have to have the water tested if the property has a well rather than city water. In some areas, the water test means checking only the quantity of water available to the house, rather than the quality. If this is the case, you may want to have your own water quality test done.

Homeowner's and Hazard Insurance - You will have to have these policies in place (and the first year's premium prepaid) at the time of the closing -- at least in most states. This insurance protects your (and the lender's) investment if the house is destroyed.

Origination Fee - In addition to the application or processing fee, the lender may also charge an origination fee. This covers the additional work it has to do when preparing your mortgage. The fee may be a flat fee or a percentage of the mortgage. If the fee is a percentage of the loan, then it is typically considered a "discount point" in disguise. This changes the tax implications and your costs, so be sure to ask the lender about this fee.

Prepaid Interest - Although your first payment won't be due for six to eight weeks, the interest will begin to accrue the day of the closing. The lender calculates the interest due for that fraction of a month prior to your first official mortgage payment. This means you will probably have to pay that interest upfront as part of the closing costs. For this reason, it is a good strategy to plan your closing for the end of the month to reduce the amount of interest you have pay upfront.

Processing Fee - This is the fee the lender charges to cover initial costs for processing the loan. This includes the application fee and fees for accessing your credit report. These fees are usually around $400 to $550. Something to watch for when comparing lenders: Sometimes the credit report fee will be listed separately from the processing fee.

Private Mortgage Insurance (PMI) - If your down payment is less than 20 percent of the value of the house, you may be required to purchase mortgage insurance. This protects the lender in case you fail to make your mortgage payments. Premiums will usually be a part of your monthly mortgage payment and will be transferred into the same escrow account your taxes and homeowner's insurance fees are paid into. You have to pay these PMI premiums until you reach the 20 or 25 percent requirement -- or, they can go on for the life of the loan. Click here for information on PMI.

Surveys - Many lenders will require that the land be surveyed by an independent surveying company. This is just to ensure that there haven't been any changes, like new structures or encroachments on the property, since the last survey. These usually run $250 to $500.

Title Insurance - Just in the event that the title company made an error when they did the title search, or there was information that was not available in the public records, there is title insurance. It will prevent you having to pay mortgage on property you no longer legally own. Lenders will require title insurance to protect their investment, but you may also want to get your own policy. Title insurance has only a one-time fee that covers your property for the entire length of time you or your heirs own it (usually 0.2 to 0.5 percent of the loan amount for lender's title insurance, and 0.3 to 0.6 percent for owner's title insurance). It is also one of the least expensive types of insurance. If the previous owner of the property owned it for only a few years, you may be able to get title insurance at a "re-issue" rate, which is usually lower than the regular rate.

Title Search Fees - A title search ensures that the person saying they own the property is the legitimate owner. A title company extensively examines public records such as deeds, records of death, court judgments, liens, contests over wills, and other documents that could affect ownership rights. This is an important step in closing your loan because it assures that there are no outside claims against the property. The fees charged for title searches are usually based on a percentage of the property cost. They typically range from $300 to $600 or more, depending on the area.