A lawyer is always a good idea, and a pre-paid legal service is good as well.

You have about $3000 in costs and prepaids for the refi.

I wonder what other fees they may have , I also read that the seller can contribute up to 6% of the contract sales price to pay for funding fee, closing costs, prepaid and other expenses.

I'll skip to the "tl;dr"....We prepaid PMI on our primary residence.We are considering refinancing.

There is no great benefit to this as most costs are "per property"....appraisals, title insurance, pre paid taxes/insurance, etc.  

Even if it's one of those 0% interest deals, it probably just means you pre-paid in the form of a higher price at the buy. 

Things might have changed, but I have two sets of renters making good money, 100k, and they're renting and have been for years.Sounds like there is no way to give a redecoration allowance in ready spendable currency...what about a prepaid account, like a gift card to a granite place or Home Depot.

Just the nature of small town workers not all are professionalized:  bank account, newer smart phone, have cash to wait for a check to clear etc.A contractor suggested I use green dot prepaid card to pay him. 

How much of the closing costs are prepaids/reserves?

It can go either way, since it is Not the tenant's money any more, unlike deposits or pre paid rents.