A Guide to Closing Costs in Arizona

It can be exciting to purchase a new home in the sunny state of Arizona, but understanding real estate is not the easiest thing in the world.

There are so many fees associated with the process, especially when you finally reach the step of closing on a home. Here is a guide to help you understand what taxes and fees the buyer and seller are responsible for when closing.

What Costs Are Arizona Buyers Responsible For?

In Arizona, buyers can expect to pay closing costs associated with the following:

• Loan origination fees: This is a fee that lenders will charge borrowers, ranging anywhere between .5 and 1% of the total loan that they take out. This fee covers the cost of the work done by lenders to handle the creation and management of the loan.
• Attorney fees: You will need a lawyer to oversee the documentation and contract signing during the real estate transactions. This fee will depend on the lawyer you choose, so do your research and compare rates before selecting your attorney.
• Homeowner’s insurance: Lenders often require their borrowers to pay the first year of homeowner’s insurance up-front with closing costs. This is meant to protect lenders from losing money on any damages to your property within the first year that you own it.
• Title-associated costs: Before you buy a home, title companies will research to be sure that all of the property’s records are in order and that there are no claims against it. You may additionally pay for title insurance during this step to protect yourself from title fraud.
• Appraisal fee: To determine the fair market value of the property you are purchasing, you will need to pay someone to appraise it. This guarantees that you do not pay more than the property is worth.
• Recording fees: Each county within a state is responsible for recording public land records. When a property is transferred from one owner to another, a fee for recording the transfer must be paid to the local government. There will also be a required transfer tax along with this recording fee. This tax is a small percentage of the price of the home. The buyer typically pays for it, but it could be negotiated so that both the buyer and seller pay a portion of this tax.
• Underwriting fee: Lenders will research your background extensively before granting you approval for a home loan. This fee guarantees that your personal information remains secure during this process.
• Escrow fee: The closing of your property transaction is managed by a third party, like a title company, an escrow company, or an attorney. The cost that you pay this third party depends on your home’s purchase price.
• Property taxes: During the property transfer, the buyer and seller will negotiate to determine the percentage of the home’s property taxes each party should pay. To keep it fair, these taxes will typically be split by the buyer and seller right down to the closing date.
• Inspection fee: Having an inspector check the condition of a property before you purchase it can help protect you from an ill-informed investment and give you a leg-up during negotiations. Depending on the type of loan that you use in the home-buying process, an inspection might be required before you can purchase a property.

What Are Arizona Sellers Responsible For?

In Arizona, sellers can expect to pay closing costs associated with the following:

• Realtor fees: Realtors make commissions on the homes they sell. Since realtors help the buyer secure the sale of their home, it is the buyer’s responsibility to cover their commission. This cost will depend on the property’s price and the percentage that the chosen realtor expects to be paid.
• Transfer taxes: While the buyer often pays these taxes, they can be negotiated so that both parties are made to pay a portion of them.
• Escrow fees: Since the title company, escrow company, or attorney overseeing the property transfer is a third party, their costs are typically paid for by both the buyer and seller.
• HOA transfer fee: If the home being sold is in a homeowner’s association, then the seller is expected to pay any outstanding balances and transfer costs required by the HOA before selling.