What are closing costs in Arizona? If you’re buying a home, you’ll want to know!
What’s at Stake?
Buying a house is one of, if not THE, most significant purchases in your life, and it’s essential to understand the associated costs. I’m sure that no one is surprised to hear me say that additional fees are associated with buying a house, right? But what are they and how much are they going to cost?
I have represented many buyers in various situations, and I pride myself on helping my clients understand all the costs associated with buying their homes. No one wants to be sitting at the closing table, signing final documents, and learning about unexpected fees. I like surprises, but NOT those kinds of surprises.
Important Factors
The closing costs in Arizona are usually very reasonable. They will depend on the price of the home, the house’s location, whether you’re getting a loan or paying cash, and so on. Let’s jump in and look at how much money you need to be setting aside and what expenses may come up.
Costs you Need to be Aware Of
#1 Inspections
The first expenses you will have in the home buying process are the inspections. These will vary depending on the home’s condition and what inspections you want to have done.
#2 Lender Fees
Assuming you are getting a loan, your lender has costs and fees to put your financing in place. This includes things like credit reports, wire transfer fees, commissions, and so on. Additionally, if you are planning to buy points upfront to reduce your interest rate in the long run, this can drastically increase your closing costs. I recommend that you sit down with your lender early in the process to understand their fees depending on the type of financing you need. If you are paying cash, you can ignore this altogether.
#3 Title/Attorney Fees
In Arizona, very few home purchases require an attorney, and most people choose to use a title company to handle the transaction. Either way, they will have fees and costs associated with ensuring that the title for your new home is put into your name.
#4 Escrow Fees
Your escrow officer will ensure that the money you pay to purchase your new home is dispersed to the appropriate parties and finally to pay the remaining balance to the seller. Examples of the escrow officer are adjusting and handling HOA fees, community fees, taxes, insurance, the seller’s mortgage, and more. As the Buyer, you will also be responsible for your share of the escrow fees.
#5 Interest
Your lender will typically require that you pay the interest due on your mortgage for the period between your closing date and the first day of the following month in advance.
#6 Utilities
Some utility companies require an initial upfront deposit before they will activate services.
#7 Bank Fees
This one is usually insignificant, but you may want to keep in mind that you may need a cashier’s check or wire when you are paying your earnest money or sending the funds to close. Often there is a nominal charge from your bank for this service.
How Much Should you Set Aside?
So, there you have it!
Overall, we recommend setting aside anywhere from 1-3% of the home’s purchase for closing costs. Why such an enormous range? Well, because it depends on so many factors that will be unique to your transaction. If you are paying cash, you should be okay closer to that 1% mark, but if you’re getting a loan and planning to buy points, you’ll want to budget more comparable to that 3% mark.
I had budgeted for more than 2% and was pleasantly surprised when it came lower, so I encourage you to do the same. We could put the additional money towards some things noted in the inspection report. Work with your lender or REALTOR® to get a good handle on closing costs in the area and the price point you are looking at.
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Here is a sample of detailed closing costs on a property at $300000 with 10% down.
House Price – $300,000
Down Payment – $30,000
Interest Rate – 3.25%
PITI – $1,562.06
Closing Cost – $6,986.16 (Typically in a seller’s market like it is at the time of this blog, closing costs are harder to write into the contract)
Bring to Closing – $36,986.16
*This is an example only and different rates may apply
If you have any questions please call me at
480-466-4917
Jay Bru
