What are closing costs in Arizona? If you’re buying a home you’ll want to know!
Hello, hello! I’m Lindsay, a proud Anthem resident and your local REALTOR® with the Wise Move AZ Team at Realty ONE Group. If you want to stay up to date on all things Anthem and Real Estate then you need to subscribe to our YouTube Channel. Pro Tip: You’re also going to want to hit that little bell icon while you’re there so that you’re the first to know when our new videos are posted every single Thursday!
What’s at Stake?
Buying a house is one of, if not THE, biggest purchase in your life and it’s important that you understand the associated costs. I’m sure that no one is surprised to hear me say that there are additional costs associated with buying a house, right? But what are they and how much are they going to cost?
As your Anthem REALTOR® I have represented lots of buyers in various situations, and I pride myself on helping my clients to understand all the costs associated with buying their home. 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.
The closing costs in Arizona are usually very reasonable. They will depend on the price of the home, the location of the home, whether you’re getting a loan or paying cash, and so on. Let’s jump in and take a look at how much you need to be setting aside and what it’s for.
Before we start I want to preface this by saying this post will not touch on the ongoing cost of owning a home. It will only look at the upfront costs to get closed. If you would like me to do a separate video/blog post on the costs of moving or the ongoing cost of homeownership let me know in the comments. I would be happy to do that.
Costs you Need to be Aware Of
Here are the closing costs in Arizona you need to be aware of:
It is likely that the first expenses you will have in the home buying process are the inspections. These will vary depending on the condition of the home and what inspections you want to have done. If you’re not sure what inspections you should be considering then you’ll want to watch our video: What Inspections to get When Buying a House. I promise you, this is money well spent.
#2 Lender Fees
Assuming you are getting a loan, your lender has costs and fees associated with putting 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 up front, 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 what their fees are depending on the type of financing you need. If you are paying cash, you can ignore this all together.
#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 things that the escrow officer adjusts and handles payment of are 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.
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 next month in advance.
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 when you are paying your earnest money or sending the funds to close you may need a cashier’s check or a wire. 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 would recommend setting aside anywhere from 1-5% of the home’s purchase for closing costs. Why such a big 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 closer to that 5% mark.
On my own home, our purchase price was under $250,000, we put 20% down and had a conventional loan. We had a small concession from the seller that helped to offset some costs, and overall we were just under 2% in closing costs.
I had budgeted for more than 2% and were pleasantly surprised when it came in lower, so I encourage you to do the same. We were able to 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 price point you are looking at.
If you would like our help with this drop us a comment below or shoot us an email at Team@WiseMoveAZ.com. We’re happy to run the numbers with you!
See YOU, next Thursday!