Why is it called a Good Faith Estimate?  Shouldn't a lender be able to tell me exactly what it will cost to refinance or purchase a home?

The lender or broker you choose is responsible for creating the good faith estimate however it is just that - an estimate.  Not all closing costs are charged by the lender.  Many are third party fees (such as title, appraisal, recording fees) however most industry professionals will provide a very accurate quote (since your loan is not the first one they have closed in your city) but at the end of the day, it's simply an educated estimate so be aware that your closing costs come day of closing could be  fraction higher or lower.  Just remember, if it sounds too good to be true it probably is so be careful when comparing closing costs.  If 4 lenders tell you thing and then Johnny tells you another - odds are the 4 lenders are right and Johnny is wrong. (P.S.  We are not referring to any Johnny specifically)

Some common closing costs are listed below (all of which may not apply)

Origination Fee – The loan origination fee is charged by the originating lender or broker.  In today's world this fee is often misused and used interchangeably with the word "points."  One point is equal to one percent of the mortgage loan and a 1% origination fee is the same cost.   However, the problem here is that points are prepaid interest (which generally is allowable for a tax deduction) however an origination fee is a fee and not considered mortgage interest.

Discount Points – Discount points are a form of prepaid interest paid to the lender in turn for a reduced interest rate.  These fees are generally tax -deductible.

Appraisal Fee – Before approving your loan for closing, a lender must have an independent valuation of your home's value.  This fee pertains to having a licensed appraiser visit your home and compile a property report indicating current estimate value, comparable homes for sale and details of the property's square footage etc. Appraisal fees vary depending on the state, type of property and home value with higher end homes usually associated with a higher appraisal fee.

Credit Report – This fee is probably the most obvious since before a lender even looks at your complete loan package they must first verify your creditworthiness.  Hence a credit report is pulled and the cost is passed on to you at closing.  This can range from $12 to $60 in most cases.

Tax Service Fee – This is an independent service fee charged by your mortgage  lender to monitor property tax payments.  This fee is usually charged regardless of whether or not you escrow taxes in your monthly payment.

Flood Certification Fee – In order to determine the appropriate insurance requirements for your property the lender must know whether or not your property is located in a federally designated flood zone.

Title Insurance –  An insurance policy that protects the owner of a title from loss resulting from disputes over ownership claims.  In most states a new title insurance policy (or updated policy) must be purchased each time a mortgage is paid - including refinancing an existing loan.